SISSON BROOK TUNGSTEN – MOLYBDENUM DEPOSIT
PRELIMINARY ECONOMIC ASSESSMENT
(2009 TECHNICAL AND ECONOMIC UPDATE)
FEBRUARY 25, 2009
J.M Marr M.Sc., P.Geo.
VP Exploration, Geodex Minerals Ltd
Geodex Minerals Ltd. TSX.v – “GXM”
Head Office Regional Office
Suite 450-800 West Pender Street 150 Woodside Lane
Vancouver, BC,Canada,V6C-2V6 Fredericton, NB, Canada E3C 2R9
Tel:604-689-7771 Tel: 506-450-4488
FX:604-689-5528 Toll Free:888-999-3500 Fax: 506-450-4422
E-Mail: marr@Geodexminerals.com Website: www.GeodexMinerals.com
GEODEX MINERALS LTD
MANAGEMENT & DIRECTORS
Jack M. Maris, President, Director
Jack M. Marr, V.P. Exploration, Director
Jack Patterson, Director
Neil D. Humphreys, Chief Geologist, Director
Clem Pelletier, Director
David M. Buckle, Director
Neil S. Seldon, Director
Blaine Bailey, Chief Financial Officer
David Martin, Regional Manager New Brunswick
Christopher R. Anderson, V.P. Business Development
David Sinclair, Ph.D
William Gardiner, M.Sc.
Raymond Dujardin, P.Eng.
SHARE STRUCTURE JANUARY
CASH ON HAND
General Account $1,003,000
Flow Through Account $1,729,000
Table of Contents
Executive Summary....................................................................................................................................... 4
1 A. Introduction ..................................................................................................................................... 5
1 B. Purpose of this report ...................................................................................................................... 6
1 C. Background, History and Geology ................................................................................................... 6
1 D. Present Project Development Status ............................................................................................. 10
2. Updated Resource (block) model........................................................................................................... 11
3. Pit Design/Grade Scheduling................................................................................................................... 15
4. Metallurgical Results, Process Development Basis, Operating Costs ..................................................... 20
5. Capital Cost Estimation ........................................................................................................................... 25
6. Waste /Tailings Management ................................................................................................................. 33
7. Financial Model - Spreadsheet................................................................................................................ 37
8. Recommendations to Pre-Feasibility ..................................................................................................... 44
9. After Pre-feasibility – What happens next? ........................................................................................... 46
The last document on the economic status of the Sisson Brook tungsten-molybdenum project
north of Fredericton, New Brunswick was a Preliminary Economic Assessment carried out by
Wardrop Engineering in November 2007. A robust NPV and IRR led to the recommendation that
work proceed to the next development stage. Infill drilling, geotechnical work and
environmental/community studies took place in 2008 and have continued since that time.
The present study, compiled mainly by consultants as described herein, is based largely on new
data, particularly an expanded block model which has recently undergone preliminary pit
design and grade scheduling and a program of metallurgical work at SGS in Vancouver. Parallel
testing indicated that a pre-concentration circuit would profoundly benefit operating and
capital costs. This upfront ore-sorting process concentrates 96.0% of the tungsten and 83.8% of
the molybdenum in slightly more than half of the rock mined, which increases grade to the mill
and reduces capital and operating costs. A plant layout and process equipment list was
prepared and costed by an independent engineering group to reflect this revised concept.
The report spreadsheet uses a mining rate of 20,000 tonnes/day for a mine life of 20 years.
Overall recoveries (sorter and mill) are 74% for tungsten and 70% for molybdenum. Tungsten is
priced at an APT price of $US 220/tonne of WO3 in concentrate, with a blended $US 50/tonne
reduction (gravity/flotation) for offsite costs. Molybdenum uses a long term price of $US 15/lb
with an 8% assessment for offsite costs and roasting. Mine Operating Costs remain at
$Can 1.30/tonne ($US 1.11), beneficiation costs are re-assessed at $Can 4.66/tonne ($US 3.96)
with G &A costs at $Can 0.66/tonne ($US 0.56).
The re-calculated pre-production Capital Costs from the new process concept are slightly
reduced at $US 339 million which includes a 30% contingency. Owner’s costs include $US 1.0
million for environmental costs during construction. Sustaining (and sinking fund provision for
reclamation) costs are assessed at 2.5% of original capital per production year.
Spreadsheet analysis indicates that the project has an Unleveraged IRR from Year -2 of 23%.
The pre-tax NPV at an 8% discount rate is $US 372 million, $US 277 million at 10%. Payback is in
Year 4. Cumulative cash flow is $US 1.18 billion.
It has long been recognized that New Brunswick offers a mining-friendly environment, good
access and excellent infrastructure. The economics of open pit development linked to the large
size of the deposit suggest that much flexibility will exist in mine planning. Reaction to changes
in metal prices can occur by constraining supply to increase margins or increasing daily volume.
The recommendation within this report is that the company moves to completion of a Pre-
Feasibility study by Q4 2009. The present report is a ‘baseline’ study or directional concept
produced in a worldwide trough of mining finance. It requires refinement and upgrading in
several areas to bring it to the stage of a commercial concept.
1 A. Introduction
Sisson Brook is a bulk tonnage tungsten/molybdenum deposit amenable to the cost benefits of
open-pit mining. It is located in rolling ‘bush’ country (crown land) about 100 km north of
Fredericton, N.B. within easy reach of several small towns. Logistics are excellent. The property
is crossed by a network of logging roads connecting into main access routes. A power line
passes south of the proposed pit area and a rail line exists north of the claims through the town
of Napadogan. Water is readily available at the site and there is highway access to tidewater at
the port of Saint John.
A Scoping Study was prepared for an open-pit deposit by Wardrop Engineering on November 9,
2007 which is available on SEDAR. This report concluded that the deposit had positive economic
characteristics. Using the normal Scoping Study combination of available data and industry
assumptions, including metal prices current at that time, the report produced an NPV of $Can
693 million and an IRR of 29.8%. The recommendation was made to proceed to Pre-Feasibility.
The decision at that time was therefore made to proceed to Pre-Feasibility, the next stage in
mine development. Contractors were hired as shown in the ‘development’ section below to
assist in collecting all the engineering, economic and environmental data necessary to reach
Pre-Feasibility and subsequent stages. Drilling continued on the property in 2008 (11,800 m) to
infill the most prospective part of the deposit (Zone III) and to check for higher grade areas such
as the molybdenum-rich East Flank Zone which was discussed in various 2007 News Releases.
The 2008 program also led to discovery of the Ellipse Zone south of Zone III. An aggressive
regional campaign was also carried out to look for other nearby deposits (six properties) which
could potentially provide ore to be trucked to the millsite to help the overall economics.
Zone III and possibly its attached Ellipse zone (as shown in Section 2) are the only sources of
tonnage for this study. The higher sulphide chalcopyrite-wolframite Zones I and II are not
presently in the mine plan and their potential remains unexamined at this stage.
Although work is continuing, enough of the Zone III data is now in hand for an updated
economic study. A new Resource model incorporating the 2008 drilling with revised resource
categories (Measured/Indicated/Inferred) was received from Mercator Geological Services
Limited, an independent consulting group, in January 2009. These resource tonnage tables are
shown in Section 2. This block model then underwent preliminary pit design analysis (Section 3)
to schedule mine grades in the twenty years of anticipated mine life with optimal grades in the
first few years. New metallurgical results from SGS (Vancouver) have led to a revised plant
layout, most importantly incorporating a new pre-concentration option (Section 4). Metal
prices, particularly molybdenum, have been lowered in line with the commodity downturn.
Capital cost estimation has been reviewed in detail (Section 5) and the present status of
waste/tailings management in Section 6. These factors are pulled together into an economic
evaluation and spreadsheet in Section 7.
1 B. Purpose of this report
This report is intended to present a ‘snapshot’ economic portrait of the Sisson Brook tungsten-
molybdenum deposit north of Fredericton, New Brunswick. It is a ‘point in time’ spreadsheet
evaluation incorporating much new data (particularly metallurgical results), revising previous
studies and using a new pricing structure for the two main metals. It is not intended to be a
detailed or complex review although much analysis (Sections 4, 5) has gone into a new
processing concept, plant layout and necessary equipment lists and costing. It will provide a
summary and valuation for the deposit at this time and will point the way forward to the Pre-
1 C. Background, History and Geology
The Sisson brook deposit was periodically explored by various companies after the mid 1950s,
much of this directed to VMS targets of Bathurst type, a completely different style of
mineralization. The present Zone III (Scheelite/molybdenite) and the adjacent Zones I and II
(chalcopyrite, wolframite) were discovered and drilled by Texasgulf Sulphur/ Kidd Creek Mines
Ltd. in the period 1978 to 1982. Extensive surface exploration was done and 40 holes were
drilled at that time.
By a Letter of Agreement dated October 25, 2004, Geodex optioned a 70% interest in the
property from Champlain Resources Inc., a private company based in Nova Scotia. A formal
agreement was concluded on July 6, 2006. There are no royalties. Terms and conditions of that
agreement have now been met and Geodex’s 70% interest has been earned. The agreement
allowed Champlain to be carried to production, its share of production costs to be recovered
from the first proceeds of commercial production.
In November 2007, Champlain’s 30% interest was the subject of competing bids from Geodex
and from Rockport Mining Corp., a private New Brunswick-based company. By acquiring 54%
control of Champlain (which is still in existence under Geodex direction), Geodex now owns an
effective 86% interest in the Sisson Brook deposit.
At the time of the Letter Agreement in 2004, the property comprised 141 claims. Additions over
the years have led to a present total of 631 claims in eight groups, protecting the deposit and
surrounding land required for development. The overall block is about 12 km north-south and
about 4 km wide, reflecting the trend of Zone III. The claim map is attached on the following
As referred to above, the Sisson Brook deposit comprises four wide and steeply-dipping zones
of porphyry-style, vein and fracture-controlled tungsten, molybdenum and copper
mineralization. The deposit straddles the strongly sheared contact of the Howard Peak
granodiorite, one of a group of Siluro-Devonian intrusions in New Brunswick hosting important
deposits of tungsten, tin, molybdenum and antimony. The focus Zone III and the new Ellipse
zones are the largest and best explored of the deposits and are characterized by sheeted quartz
veins and stockworks carrying molybdenite and scheelite. Zones I and II to the north of Zone III
are younger vein systems with chalcopyrite, wolframite and increased pyrite and pyrrhotite.
The presence of mineralized and altered felsic dykes in Zone III (one at least of which is Late
Devonian in age) suggest the presence of a buried granitic stock at depth which supplied the
heat source for the hydrothermal system and most of the metals in the deposit.
The local geology and the distribution of the mineralized zones are shown on the next page. A
comprehensive, updated geological report is available from the company on request
1 D. Present Project Development Status
Following the successful Scoping Study in November 2007, the decision was made to proceed to
Pre-Feasibility. Contracts were let to Wardrop Engineering for reporting/engineering studies, to
SGS Canada Inc. for metallurgical testing, to Rescan Environmental for environmental and
community relations and to TerrAtlantic Engineering Inc. for geotechnical work. Infill and
expansion drilling in 2008 (11,800 m) was carried out by Geodex.
These contracts were suspended in late 2008 with the downturn in market activity and the lack
of financing for mining projects. Much work has already been completed and these contracts
can be re-established at any time. Rescan registered the project on September 5 th 2008 under
the NB Clean Environment Act and on October 24th 2008, Geodex was informed that, as
expected, a comprehensive Environmental Impact Assessment (EIA) would be required.
Environmental monitoring has been maintained over this period.
The environmental work has not as yet disclosed any major problems and several
community/town hall meetings have introduced the project to the local population. Acid rock
drainage (ARD) studies are underway. The very low sulphur value in the Zone III head assay
composite (0.45% S) is an encouraging indication. Preliminary rock mechanics studies suggest
very favourable 50 degree to 60 degree bench face slopes. Waste and tailings management
studies are proceeding.
The provincial government of New Brunswick has expressed strong support for the project due
to the general ‘have-not’ state of the economy and the de-commissioning of the Bathurst mine
in 2010. This large underground zinc mine, a major tax contributor to the provincial economy,
has been in operation since 1964.
2. Updated Resource (block) model.
Contributor: Mercator Geological Services Limited.
65 Queen Street, Dartmouth, N.S.
NEWS RELEASE (Distributed January 27, 2009.)
Geodex updates Zone III Resource Model at Sisson Brook, New Brunswick and adds new
Resources from the adjacent ‘Ellipse’ Zone.
Geodex Minerals Ltd., (the ‘Company’) is pleased to report receipt of an updated resource model for its
Sisson Brook tungsten-molybdenum deposit, located north of Fredericton, New Brunswick. This
resource estimate incorporates an additional 11,800 m of infill and expansion drilling (48 angle holes)
carried out on the deposit during the summer of 2008. It therefore adds substantial new data to the
previous resource estimate, published in a News Release of June 5, 2008.
As in previous resource estimates, this study was independently prepared by Mercator Geological
Services Limited (Mercator) of Dartmouth, Nova Scotia under supervision of Mr. Michael Cullen, P. Geo.
and Mercator staff geologist Mr. Matthew Harrington. Mr. Cullen is a ‘Qualified Person’ as defined
under National Instrument 43-101 (NI 43-101). The estimate is considered compliant with NI 43-101 and
a Technical Report supporting the estimate will be posted on SEDAR within 45 days.
The present resource estimate differs from previous estimates which were based solely on the southern
half of the Sisson Brook deposit, the area referred to as Zone III. It includes for the first time a resource
calculation for a new zone called Ellipse which lies a few hundred metres to the south of the central
‘core’ zone of Zone III. The two zones intersect at the south end of Zone III. Details of the nature and size
of the Ellipse Zone are set out in a News Release of September 30, 2008. Main differences from Zone III
are that Ellipse lies entirely within diorite on the west side of the property and in addition appears to
have a northwesterly orientation. It appears to be relatively enhanced in molybdenum, otherwise
mineralogy and vein characteristics are similar.
Updated January 2009 Mineral Resource Estimate and Classification.
Mineral Resources for Zone III and Ellipse are shown in the following tables. These are Mineral
Resources and not Mineral Reserves, as economic viability has not yet been demonstrated.
All the tonnage in the lowest threshold category in Zone III (including Ellipse) attests to the
large size of the deposit, which has not yet been totally defined. New contributions come
chiefly from the Ellipse Zone, from peripheral drilling on the east side of Zone III to define the
East Flank Zone, which remains open to the east, and to expansion of the overall resource at
The company projects that grades at the mid-level threshold (0.125% WO3 Equiv.) will be the
base case situation, as presently understood. These are highlighted in the attached tables.
The ‘Measured and Indicated’ resource in both zones shown above at this mid-level (0.125%)
WO3 Equivalent threshold is 91.0 million tonnes. This is somewhat reduced from the 102.8
million tonnes reported in the June 5 News Release but reflects only use of a reduced
molybdenum price in the WO3 Equivalent conversion formula. In view of recent volatility in
world molybdenum prices, the conversion molybdenum price was reduced by 30% (to
$US15/lb) from the base case pricing in the 2007 Scoping Study. This is indicated in the formula
attached to the table. Much tonnage in the Inferred category remains to be upgraded.
By contrast, grades have significantly improved in these mid-level grade areas. In the base case
Zone III, 0.125% WO3 ‘Measured and Indicated’ category, WO3 grade has increased from
0.088% to 0.107%, an increase of 21.6%. The new tonnage/grade combination indicates a 7.6%
increase in contained metal at this threshold.
The Company will be assessing these results in the near term and particularly incorporating
other new data which has been appearing this winter. Aside from the expanded block model
discussed above, the company has preliminary results from the SGS metallurgical program and
will be embarking this month on pit design (starter pits) and plant design layouts, including a
new pre-concentration option. The company feels these will substantially revise the 2007
Wardrop Scoping Study and will point the way forward to the Pre-Feasibility study which is the
next stage in the Sisson Brook development program.
Metal prices have recently been very volatile, particularly that of molybdenum. The company
cautions that current metal prices may not be maintained for the development period or the
life cycle of any resulting mine. However, it remains confident that the near-surface, open-
pittable nature of the deposit and the excellent access/power structure in New Brunswick offer
very positive encouragement.
Jack Marr, M.Sc., P.Geo., is the in-house QP for this project and Mr. Michael Cullen, P. Geo. of
Mercator is responsible for the resource estimate presented in this press release.
The resource estimate was carried out using Surpac® 6.1.1 modeling software, inverse distance squared
grade interpolation and 3.0 meter down hole assay composites capped at 0.35% Mo and 0.6% WO3.
Metals were separately interpolated. Block size was 10 meters (x) by 10 meters (y) by 10 meters (z) with
sub-blocking at 5 meters (y) by 5 meters (x) by 5 meters (z). Grade interpolation in Zone III utilized
multiple search ellipse passes constrained by grade shell wireframes oriented along the primary north-
south mineralization trend (010 to 020 azimuth) in a vertical plan, with a major axis range of 175 meters,
a major/semi major axis ratio of 1 (175 meters) and a major/minor axis ratio of 10 (17.5 meters). Grade
interpolation in the Ellipse Zone utilized multiple search ellipse passes constrained by grade shell
wireframes, oriented along the northwest-southeast mineralization trend (130 to 135 azimuth) with a 60
degree dip to the southwest and the same range and ratio parameters applied in Zone III. The entire
model is fully constrained within a peripheral three dimensional solid. A specific gravity factor of 2.87
grams/centimeter3 was used for mineralization hosted by gabbro, a factor of 2.77 grams/centimeter3
was used for mineralization hosted by mixed volcanic and sedimentary lithologies, a factor of 2.82
grams/centimeter3 was used for mineralization hosted by diorite, and a factor of 2.70 grams/centimeter 3
was used for mineralization hosted by granitic lithologies. A WO3 Equivalent (WO3 Eq.) factor of WO3
Eq.% = WO3% +(Mo%*2.02) was developed on the basis of client-supplied market pricing forecasts and
70% WO3 recovery and 85% Mo recovery factors reported in the project Scoping Study by Wardrop
Engineering Inc. dated November 7, 2007
Measured resources were defined as any block having 12 included assay composites, with not more than
four from a single drill hole, showing averaged distance from the block of 25% of the major axis range
(43.75 meters), with the block being 30 meters or less from at least one included composite. Indicated
resources were defined as any block having 12 included assay composites, with not more than four from
a single drill hole, showing averaged distance from the block of 50% of the major axis range (87.5
meters), with the block being 60 meters or less from at least one included composite. Inferred resources
were defined as all blocks within the peripheral deposit constraint not identified as Indicated or
3. Pit Design/Grade Scheduling
Contributor: Robert Sim P. Geo
SIM Geological Inc.
6810 Cedarbrook Place.
Delta, B.C. V4E 3C5
This memo describes the approach taken in generating a series of phased pit shells on the Sisson Brook
The resource model was provided by Mercator as a comma delimited ASCII format file containing X,Y,Z
(block centres), block size, Mo%, WO3%, WO3eq%, SG, geology code and resource class. This one file
covers both the Zone III and Ellipse areas of the Sisson Brook deposit. Note that Mercator’s original
model uses variable block sizes of 10x10x10m and 5x5x5m which is not compatible with the MineSight®
system. As a result, the model was standardized to 10x10x10m blocks prior to import into MineSight®.
This block size is believed to represent an appropriate selective mining unit (SMU) size for a deposit of
this type and scale.
Mercator also provided a file in dxf format containing the surface topography in both 3d contour lines
and a 3d triangulated surface.
The project area was expanded in MineSight® to account for the lateral extent of the pit shells. The
project limits are defined below.
Min Max block size #blocks
X 649000 651200 10 220
Y 5135500 5137800 10 230
Z -250 330 10 58
The block model file and surface topography were imported into MineSight® (V 4.50). The topo surface,
which is relatively flat in this area, was extended laterally in order to cover the complete project area.
Grade and bulk density (SG) data occurs only in model blocks defined as being in the measured,
indicated or inferred categories. Zero grades (for Mo%, WO% and Weq%) and a default SG value of
2.77t/m3 have been assigned to all undefined blocks below the topo surface (i.e. defining the grade and
density of waste material surrounding the deposit area).
“Phased” pit shells are created using a floating cone algorithm and a series of variable metal prices
calculated about the recoverable tungsten equivalent (RWeq) grades in the block model. The RWeq
grade is estimated to be 72% of the Weq% grades previously calculated in each block in the model. This
assumption is based on the following assumptions:
Recoveries WO3 Mo
Sorting 96% 83.8%
Mill 77% 84%
Overall 73.9% 70.4%
(Average applied to WO3 Eq% is 72%)
Note that the objective is to produce a series of phased shells which extract the higher-grade material
during the initial production years. This sequence occurs whether or not the recovery factors are
implemented. It is only the extent of the “ultimate” pit shell that is affected by the recovery factor.
The following operating and technical parameters were also used in the floating cone calculations (note
that costs were initially provided in CDN$ by Geodex which were converted to US$ using a 0.85
Mining cost: US$1.11/t ore and waste
Milling costs: $4.53/t
Pit slope: 50 degrees
For the purposes of this study, pits have been generated about all classes of material. As defined in the
CIM definitions, only measured and indicated resources can be converted to (proven and probable)
“reserves”. However, since this is an initial evaluation of the economic potential of the deposit (scoping
study level), inferred resources have been included in the calculations and resources are presented
within a series of pit shells. The resources listed within pit shells include inferred mineral resources that
are considered too speculative geologically to have the economic considerations applied to them that
would enable them to be categorized as mineral reserves and there is no certainty that this preliminary
assessment will be realized.
A series of pit shells were tested at varying metal prices beginning at a minimum of $1.00/lbWO3 to a
maximum of $9.00/lbWO3. The objective here was to produce a series of 10 shells which were
somewhat evenly spaced down through the deposit (i.e. the volume from each shell produced a tonnage
of material of approximately 10-25kt). This would allow for some reasonable degree of selectivity
during the generation of the mining schedule.
Although the actually prices used in the generation of each shell is of little significance, I have listed
them below. During the floating cone calculations, the low price of $2.50/lbWO3 used for the first shell,
forces the extraction of only the higher-grade material. Subsequent price increases allows for the shells
to dig deeper into the deposit (the higher prices can support the extraction of more waste material).
Shell Price ($/lbWO3)
The tonnage and grade of material between each pit shell has been summarized in a spreadsheet at cut-
off increments from 0 through 0.25%Weq. From this list, one can determine the amount of waste that
has to be extracted from each phase when a projected cut-off threshold is applied.
Plan showing limit of phased pits
Section 5136800 showing WO3Eq block grades and phased pit shells
4. Metallurgical Results, Process Development Basis,
Contributor: H.M. Bolu P. Eng.
Bolu Consulting Engineering Inc.
#301-304 West Cordova St.,
Vancouver, B.C., V6B 1E8
Initial scoping level of metallurgical testing on Sisson Brook was initiated in December 2007 and was
conducted by SGS Lakefield using drill core samples. Testing was conducted on four sample types and
was focused on various analyses, grindability of various rock types, mineralogy (modal analyses), and
some scoping level gravity and flotation tests for the recovery of tungsten and molybdenum.
Process development for Sisson Brook Tungsten-Molybdenum project for the current Technical and
Economic Update Study was based on the results of subsequent preliminary metallurgical test work
conducted at SGS Vancouver. Samples for this program were shipped to SGS in September 2008, and
consisted of 2.8 tonnes of split drill core (~2‟ dia). This metallurgical sample was a composite of six
samples provided by Geodex. Each of the sub-samples came from within the higher grade central „core‟
zone of Zone III and was selected to represent typical metal values within the gabbro, the central
volcanic-hosted section and the new East Flank Zone. Each was selected from several holes in their
particular area. The composite is judged to be representative of the central part of Zone III. Assays by
SGS showed this composite to contain 0.096% WO3 and 0.038% Mo. The sample also contained 0.45%
The testing program to date covered investigations in various areas including the pre-concentration of the
feed materials by ore sorting and other techniques, recovery of tungsten by gravity methods, flotation
recovery of both molybdenum and tungsten, as well as other determinations. Results of the preliminary
bench-top ore sorting tests that used ~1 inch rock samples indicated that potential exists to reject low
grade rocks from the feed materials thereby a significant upgrade in WO3 and Mo grades using
Ultraviolet fluorescence (UV) and dual energy X-Ray tomography (DEXRT) sorting techniques. Further,
results of bench scale mineral dressing tests on non-sorted samples demonstrated that high grade
concentrates could be produced by conventional flotation (for molybdenum and tungsten) and gravity (for
tungsten) techniques. These results led to the development of conceptual process flowsheets as discussed
The process developed for Sisson Brook for this update study involves crushing and ore sorting of feed
materials, where a low grade material is rejected into a waste stockpile, followed by further comminution
of the upgraded product to a size suitable for grinding; ~10 mm. Grinding is followed by molybdenum
and bulk sulphide flotation including a regrind and a cleaner circuit to produce marketable molybdenum
concentrate. Tailings from this circuit will be sized and sent to a gravity circuit for the recovery of coarse
tungsten values while the fines proceed to tungsten flotation. All three types of concentrates;
molybdenum and tungsten (gravity and flotation) will be dewatered and bagged for shipment to markets.
Please see process block diagram below. Process flowsheets are available on request.
SISSON BROOK PROCESS BLOCK DIAGRAM – CONCEPTUAL STUDY
WO3 Gravity Con
WO3 Flot’n Con
WO3 FLOT’N TAILS
TO DISPOSAL TO DISPOSAL
Proposed plant design is based on a nominal 20,000 t/d of processing rate through the crushing and ore
sorting plant, and on 10,150 t/d of milling and processing capacity through the grinding and
flotation/gravity plant as described below.
Crushing and Ore Sorting: ROM feed material will be crushed to nominal 200-mm before
screening into three size ranges for ore sorting. The two coarse size ranges will use UV sorting
while the finer size range will use the DEXRT sorting technique. Ore sorting utilizing various sort
technologies based on attributes such as colour/translucence, x-ray and conductivity, has been used
successfully in mineral industries for many years. Their potential use in tungsten processing has
recently found renewed interest as several projects world wide are reported to be in the testing and
development stage. Using the ore sorting test results as the basis, it is predicted that nearly one-half
of the feed material by weight may be separated as a low grade reject stream with reasonably low
metal losses. This results in an upgraded feed at nearly half the tonnage for further processing
through the grinding and concentration plant. Please see table below for the predicted metallurgical
recoveries for ore sorting and the subsequent processing through the concentrator.
Grinding and Classification: The upgraded feed material (with reduced tonnage) will then be
ground to the required liberation size of approximately 300 m through a two-stage rod milling and
screening circuit. Rod mills and screens are selected for this duty in order to maximize tungsten
recovery (both gravity and flotation) while minimizing the generation of slimes. This approach is
commonly used in the industry as the tungsten bearing mineral, particularly scheelite, is considered
to be friable and highly prone to sliming in comminution circuits. Ground material will be
thickened to a density suitable for the subsequent molybdenum flotation as described below.
Molybdenum and Bulk Sulphide Flotation: Thickened material will be subjected to molybdenum
and bulk sulphide flotation using a conventional reagent scheme as widely practised in the industry.
Molybdenum rougher concentrate will be reground and upgraded in a ball mill-column cleaner
flotation circuit to produce molybdenum concentrates (+53% Mo) which will be dewatered and
packaged for shipment to markets. Molybdenum flotation tailings will proceed to bulk sulphide
flotation where the rougher concentrate will be cleaned once and the cleaner concentrate will be
sent to the tailings pond for disposal while the sulphide tailings will proceed to the gravity circuit
for tungsten recovery.
Tungsten Gravity Separation: Tailings from the sulphide flotation circuit will be classified into
two size ranges through hydrosizers(s) ahead of gravity separation. The coarse and (de-slimed)
fine products from hydrosizing will be treated through a series of spirals to produce their respective
tungsten rougher concentrates which will then be upgraded on shaking tables to produce a final
table concentrate. This concentrate will further be upgraded through a sulphide flotation and two
magnetic separation circuits to produce high grade (+65% WO3) tungsten gravity concentrates
which will be dried and bagged for shipment to markets. A regrind circuit will provide further
liberation and recycling of gravity middlings. Gravity tailings will proceed to tungsten flotation
Tungsten Flotation: Gravity tailings will be densified and sent to tungsten flotation for the
recovery of fine tungsten values not recovered by the preceding gravity circuit. Flotation will take
place in a conventional rougher-scavenger-cleaner circuit. Further, it will utilize a conventional
reagent scheme and a circuit of mechanical and column cells also as commonly used in the
industry. Final cleaner tungsten concentrate (~50% WO3) will be dewatered, dried and packaged
for shipment to markets.
Tailings disposal and Fresh Water Supply: The two main tailing streams, namely the bulk
sulphide concentrate and tungsten flotation tailings will be combined and pumped to a proposed
tailings pond located approximately 2.5 km from the mill site. Tailings supernatant water will be
recycled to the mill as process make-up water via a pump-and-pipeline system. Fresh water source
for potable, reagent mixing and other process make-up purposes will be the Napadogan river
located approximately 1 km distance from the proposed mill site.
Process Metallurgy and Recoveries
The metallurgical prediction provided in the following table is based on results of preliminary test work to
date. As the table indicates, the plant will receive 20,000 t/d or a nominal 7M t/a of feed from the open
pit at average grades of 0.098% WO3 and 0.031% Mo (grades over 20 year mine life). Ore sorting, as
discussed above, will result in an upgraded product constituting about 50.7% or 3.55M t/a of the feed
mass while carrying with it approximately 94% of the tungsten and 83% of the molybdenum content in
the ROM feed. The low grade “throw-away” reject product will be stockpiled or may be used in tailings
Feed to the proposed concentrator, ie: from grinding through to tailings disposal, is predicted to be 10,150
t/d at average grades of 0.185% WO3 and 0.052% Mo. Mill recoveries are predicted to be 77% for
tungsten (combined gravity and flotation concentrates) and 84% for molybdenum, resulting in overall
plant recoveries (from ROM to concentrate packaging) of approximately 74% for tungsten and 70% for
SISSON BROOK TUNGSTEN-MOLYBDENUM PROJECT
TECHNICAL AND ECONOMIC UPDATE STUDY
PRELIMINARY OVERALL METALLURGICAL SUMMARY
Tungsten Molybdenum Tonnage
ROM Grades and Tonnes 0.098 %WO3 0.031 %Mo 7,000,000 t/a
ROM Contained Metal WO3: 686,000 MTU/a Mo: 4,873,000 Lb/a
Recoveries into Sorter Concentrate 96.0 % 83.8 % 50.7%
Sorter Concentrate Grades and Tonnes 0.185% WO3 0.052% Mo 3,550,000 t/a
Mill Recoveries 77% 84%
Overall (Sorter+Mill) Recoveries 74% 70%
Mill Products - Grades 60% WO3 53% Mo
507,000 MTU/a 3,397,000 Lb/a
Mill Products - Contained Metal
Mill Products - Tonnage 8,449 t/a 2,907 t/a
Operating Cost Estimate
Process operating cost estimate below includes costs for operating and maintaining the process plant from
coarse ROM feed dump pocket at the primary crusher through to concentrate load out facilities, tailings
management, tailings ponds plus process and fresh water pumping. Average Life-of-Mine process
operating costs and unit costs in both Canadian and USA dollars are provided in table below. The basis
for these costs includes previous experience of similar operations on such areas as manning levels and
reagent prices; test results on power and reagents‟ consumption levels; in-house data for prices on
consumables; and other rules of thumb as used in the industry. Power cost is an estimate only at this
Annual Cost Unit Cost Unit Cost
(CAD$) (CAD$ /t ROM) (US$ /t ROM)
Supervisory Staff $910,000 $0.13 $0.11
Operatig Labour $2,721,440 $0.39 $0.33
Maintenance Labour $1,746,000 $0.25 $0.21
Process Power $7,487,000 $1.07 $0.91
Reagents $9,865,439 $1.41 $1.20
Grinding Steel $4,009,847 $0.57 $0.49
Maintenance Supplies $3,047,059 $0.44 $0.37
Freight to site $1,419,600 $0.20 $0.17
Reject Haulage $0.06 $0.05
Other Expenses $0.14 $0.12
TOTAL PROCESS OPERATING COST $30,496,585 $4.66 $3.96
5. Capital Cost Estimation
Contributors: Mark Dobbs P. Eng., Peter McNiven P. Eng., Larry Robinson P. Eng.
Axxent Engineering Ltd.
312, 7485 – 130th Street,
Surrey, B.C., V3W 1H8
This portion of the report outlines the design work and estimating performed by Axxent Engineering Ltd
(Axxent) as part of the current project update. Changes from the 2007 Wardrop scoping study are due
to new data from metallurgical and pre-concentration testing (Section 4).
Crushing, Screening and Ore Sorting
Recent advances in Ore Sorting have made it feasible to sort ore prior to the concentrator grinding
circuit to eliminate approximately 50% of very low grade ore from needlessly being processed. The
attached figure shows the new crushing, screening and ore sorting layout prior to fine ore stockpiling. In
general terms, the process involves screening crushed ore into 3 streams which are then sorted via UV
and X-ray methods to reject low grade ore and send acceptable ore for further crushing and stockpiling
as feed for the concentrator. Crushing power is reduced due to reject ore bypassing the secondary
and/or tertiary crushers. The quaternary crusher is eliminated.
Reduced throughput in the concentrator due to ore sorting and a general rework of the flow sheets has
led to the following changes (see attached figure).
Direct feed from fine ore stockpile into 2 primary rod mills eliminating 4 feed bins and 8 feed conveyors
2 Primary and 2 Secondary Rod Mills replace the 4 Primary and 4 Secondary Mills
Primary and secondary rod mills share pump boxes and pumps eliminating 4 pumpboxes and
Primary and Secondary grinding horsepower has been decreased from 20,000 hp to 9200 hp
Addition of Grinding Thickener
Two regrind mills have been added with 460 hp (Moly) and 600 Hp (Tungsten).
Reduction in number and increase in size of Flotation cells
Simplification of concentrate load-out area
Capital Cost Estimation
This Technical and Economic Update addresses the changes to the Capital Cost Estimate of the Sisson
Brook Tungsten / Molybdenum project that have been made since the November 2007 Scoping Study
done by Wardrop Engineering Inc. (WEI). Process flowsheets for this current update are based on
preliminary metallurgical test work conducted at SGS during the second half of 2008, and are developed
by Bolu Consulting Engineering Inc. Further details on process development are covered in Section 4 of
The estimate update is prepared in US Dollars. There is no consideration of escalation at this time. The
current state of the world economy has a significant impact on the capital costs because pricing of major
equipment, steel, concrete, construction labour and shipping has been going through a period of flux
over the past seven months. The estimate update is based on plant location, throughput capacity, final
product, major mechanical equipment list, process flow sheets, general arrangements, plot plans and
specifications for major mechanical and electrical equipment items, all on a preliminary basis.
Economic revisions include:
(1) Capital costs of:
a. Electrical Power, transmission and substation system
b. Primary, secondary and tertiary crushing and sorting including conveyors and stockpiling
– increased costs due to ore sorting process and decreased costs due to elimination of 4th stage
c. Grinding equipment and infrastructure – decreased costs due to equipment changes
and to reduction in volume of grinding
d. Separation, flotation and dewatering equipment and infrastructure for both
Molybdenum and Tungsten – decreased costs due to lower processing volumes
e. Reagent processing – no significant changes
f. Tailings processing – lower costs due to lower volume of tailings
g. Buildings – increased costs in crushing from new ore sorting requirements and lower
costs in the concentrator building due to smaller footprint
h. Infrastructure – lower costs due to reduced shipping costs and significant reductions in
construction management, building construction and equipment installation.
The process of ore sorting has been added to the area between the primary crusher to the stockpile.
This reduces the tonnage of material going through the concentrator from 20,000 tpd to 10,000 tpd.
There is more crushing and sorting equipment required in this scenario plus larger enclosures, one for
the primary sorting and the other for the secondary sorting. The estimate of capital costs of this ore
crushing, sorting and stockpile area has changed from $52.7 million to $54.7 million.
The concentrator flow sheet has been revised to account for lower volumes of ore being processed.
The Capital Cost updates are summarized in the attached table. The overall estimate of the project is
expected to decrease by approximately 5% from the Wardrop estimate in the fall of 2007 due to the
development of a revised process that includes ore sorting. This has resulted in reduced throughput for
the grinding and processing plant as well as reduced tailings disposal requirements. These reductions
are made possible by the introduction of ore sorting and the rejection of a low grade reject stream from
the ROM feed materials. A capital cost contingency of 30% is applied to reflect the high level nature of
the estimate and unforeseeable costs within the scope of the estimate.
Mining equipment is assumed to consist of relatively small sized drills (10” or less), excavation
equipment and hauling equipment. Two middle-sized shovels, three loaders and four dozers are
selected to provide flexibility. No changes to mine equipment size of number are proposed in this study.
Using current process flowsheets as the basis, an equipment list of major process and mechanical
equipment was developed. Major equipment was then sized and specified using the preliminary mass
balance data. Equipment prices were developed using in-house data and costs from similar recent
projects to cover the following major items:
Rock breaker, crushers and screens
Ore sorters and associated equipment
Feeders and conveyors
Flotation cells and conditioning tanks
Cyclones, hydrosizers, spirals and shaking tables
Filters and other dewatering equipment
Tailings pipelines, reclaim water system and fresh water pipelines were estimated using preliminary
sizing and in-house pricing. Other and minor equipment including pumps were factored. Motors are
included with process equipment costs. Ore Sorter equipment costs were supplied by a potential
equipment vendor in Germany.
New quotes have not been obtained. The current equipment list in the attached table, has been revised
to reflect changes to the process as noted above.
Preliminary general arrangement drawings were prepared. Based on these layouts, the milling and
concentrator building envelope has been reduced from 19,000 m2 in the earlier estimate to 10,500 m2 in
the Axxent update. The secondary / tertiary / quaternary crushing building envelopes have been
increased from 4,400 m2 to 5,500 m2 in the Axxent estimate to include ore sorting and secondary and
tertiary crushing stages only. The total of all building structure envelopes has been reduced from 23,400
m2 to 16,000 m2.
A comparison was made using the electrical trade wages for CLAC in BC for the period from July 1, 2009
to June 30, 2010 as the base. The comparative figure was the rate for IBEW L2166 (Electrical Workers
from the high voltage transformer to the equipment) Northern NB (North of Fredericton). These figures
represent the cost of an electrical trade worker at a blended rate for a 50 hr week. The IBEW figure
represents a signed contract for the period. The CLAC figure represents the published wage
expectations for the period.
It has been established that the US$60 / hr overall labour rate in the estimate is reasonably valid for a
blended 50 hour week.
Electrical Power / Transmission / Substation
The 2007 assumption has been revised to a tap-off from a 138 kV NB Power transmission line that is 25
km away from the mine. The estimate now includes a tap-off cost of $2 million and 25 km of 138 kV
transmission line at $200,000 per km. There will also be a higher cost of a substation at $2 million. A
portion of the capital costs of the tap-off and transmission line will be paid as an operation cost by way
of a tarrif.
These numbers were established from emails from NB System Operator and also by comparison to a 130
km long 230 kV transmission line in British Columbia.
No revisions have been made to this estimate from the 2007 Wardrop work.
Quantities – Quantities of steel and concrete have been revised to reflect the changes to building
envelopes and conveying lengths.
Equipment – Equipment pricing has been revised to reflect major equipment described in the
Bulk Materials Pricing – Bulk Material pricing was unchanged from the 2007 estimate to reflect the
current state of flux of commodity pricing.
Labour Rate Buildup – Labour Rate Buildup follows the conventional process of converting a 35 hour
wage, including benefits, to a contractor’s charge-out rate for a 5 day 50 hour workweek.
Installation Man-hours – Installation Man-hours were not revised because the estimated hours from
the WEI estimate appear to reflect the appropriate level of effort to install the current configuration of
Ancillary Facilities – Ancillary Facilities estimate was not revised from the WEI estimate because similar
facilities are required in the updated version of the project. The mill staffing requirements have not
been changed from the WEI estimate and the mobile equipment estimate has not been modified.
Construction and installation work is expected to follow a 5 day / 50 hour week schedule except for
periods when weekend overtime is required.
1. Indirect costs
a. Owners costs – additional estimated costs were added for regulatory, legal, permitting
and sunk costs.
b. Land acquisition (if any)
c. EPCM – the standard estimating convention of 12% of direct costs was followed.
d. Construction indirect costs – the allowance in the WEI estimate appears to be adequate.
e. Spare parts – an estimate for Critical Spares was included. Otherwise spare parts and
first fills was accounted for in the working capital.
f. Freight – the freight estimate was reduced to reflect the smaller size and weight of most
of the major equipment.
g. Construction camp – the estimate for the construction camp was not changed because
the assumption remains that the workers will be housed off site.
h. Vendor’s reps – the allowance for vendors’ representatives was retained from the WEI
i. Start up and commissioning – the allowance for start up and commissioning was
reduced to reflect the smaller sized equipment and lower complexity of the
j. Contingency – the allowance for contingency was increased to reflect the high level
nature of this update.
A Overall Site 9 6 Increased Transmission
B Surface Mining & Mining Equipment 21 21
C Primary Crushing, Ore Sorting, Secondary / Tertiary 53 55 Add Ore sorting, Eliminate Quatrinary
Crushing & Reclaim Crushing, Smaller Stockpile
Primary Crushing & overland conveyor Eliminate significant conveying &
3 Secondary, Tertiary, Quadrinary
Ore Sorting, Secondary / Tertiary Crushing & Reject &
E Grinding, Screening, Cleaning, Flotation, Thickener, 80 105 Process 10,000 tpd instead of 20,000
E0 Mill Building
E1 Grinding & Classification
E2 Flotation, Regrind & Gravity Concentration
E3 Concentrate Dewatering & Loadout
F Tailings 15 24 Process smaller amount of tailings
G Water, Air & Sewage 2 2
J Auxiliary Buildings 7 7
K Plant Mobile 2 2
Direct Costs 189 222
X Project Indirect Costs 63 70
Logistics & Spares Less equipment - smaller sizes
Commissioning & Startup
Y Owner's costs 9 5 Additional Owner's Costs were
Z 30% Contingency 78 59 20% in previous scoping study
Capital Cost Comparison between Wardrop (2007) and Axxent (2009)
6. Waste /Tailings Management
Contributors: John Brodie P. Eng.
Brodie Consulting Ltd.
572 St. Andrews Place,
West Vancouver, B.C
TerrAtlantic Engineering Limited,
515 Beaverbrook Court,
Fredericton, New Brunswick, E3B 1X6
General (TerrAtlantic Engineering Limited).
Waste/tailings management was part of a broader geotechnical and hydrogeological contract
awarded to TerrAtlantic Engineering, based in Fredericton, New Brunswick. The waste/tailings
studies were sub-contracted to Brodie Consulting Ltd. and results to date are discussed below.
TerrAtlantic assembled a three dimensional RQD model for the deposit and drilled eight
boreholes, fourteen screened monitoring wells and nine test pits in the area of the planned
open pit. In addition, they conducted in situ hydraulic conductivity testing, core orientation in
the inclined borehole and acoustic televiewer logging of five of the vertical holes. They also
laboratory tested soil and rock samples, evaluated water levels in all the monitoring wells,
provided analyses of twenty one groundwater samples and conducted dewatering and mapping
of the main Zone III trench.
TerrAtlantic was also involved in the delineation and evaluation of various tailings area options.
Three boreholes, six screened monitoring wells and forty test pits were dug in the Bird Brook
tailings area, the area selected and discussed by Brodie below. Eight test pits were excavated in
the planned waste disposal area.
This work is still at a preliminary stage and more study is clearly required.
Waste/Tailings specific (Brodie)
Preliminary engineering and geo-chemical assessment, as discussed above, has been conducted to
identify a waste management strategy for the Sisson Brook deposit. Key parameters are:
Tailings quantity is estimated to be 121 M m3.
The ore (based on only 5 samples) is marginally net acid generating. After flotation removal of the
economic minerals, the overall tailings product is expected to be net acid consuming.
Mineral processing is expected to yield:
o A coarse rejects product that is gravel to sand-sized.
o a predominantly silt sized tailings with a low % of sand.
o Geo-chemical characterization of these materials has not been conducted.
Some of the waste rock may be net acid-generating. Quantities of waste rock types have not been
The Sisson Brook area has a mean annual precipitation of 1113 mm, of which 833 mm falls as rain, based
upon Environment Canada climate data for the town of Woodstock, located approximately 75 km south-
west of the mine site.
The Sisson Brook deposit is situated in Zone 2 (on a 6 zone scale) in terms of seismic risk, based upon
Natural Resources Canada information.
Four potential tailings sites were evaluated using the factors described below. These led to
identification of the Bird Brook site as the preferred tailings disposal location.
1. The regional topography consists of rolling terrain with slightly more than 100 m total relief. Local
relief is less than this. The regional topography is of a similar nature for a great radius (> 50 km)
around the deposit location.
2. Infilling of a major lake would not be considered.
3. The ore deposit straddles the Nashwaak/Napadogan watershed. Situation of the tailings deposit in
the Napadogan watershed is preferred.
4. Routing of tailings discharge and reclaim water lines over major rivers should be avoided.
5. The regional surficial geology consists of a veneer, typically in the order of 5 m, of silty till overlying
bedrock. Within the Bird Brook area, the surficial soil is more granular.
6. The coarse ore rejects and/or some of the waste rock is expected to be suitable for use as the main
construction material of the dams.
7. Considering the wet climate and seismic setting, the upstream construction method may not be
viable. Centerline construction method for the dams has been assumed.
8. The tailings impoundment is expected to have a net positive water balance (discharge of
accumulated water is expected).
9. Initial dam geometry, for the purpose of determining storage efficiency, is based upon downstream
slopes of 2.5:1 and upstream slopes of 1:10.
Preliminary Tailings Management Concept
The Bird Brook is located about 2 km north of the deposit. See the attached map. This site is in the
Napadogan watershed. There are no lakes at this potential site. Key aspects for tailings disposal here
o Starter dams will be constructed at the eastern end of the Bird Brook area, near to the
mill location. Dams would be constructed of coarse rejects and/or select waste rock.
o If necessary, a sulphide flotation circuit will be operated to remove acid-generating
components from the coarse ore. The sulphide float will be placed in a dedicated facility
for this type of material.
o Coarse ore rejects will be trucked or conveyed into the western (uphill) side of the
o Fine tailings will be pumped to the crest of the dams and discharged hydraulically onto
o The Bird Brook site has capacity for 120 M m3 of tailings. It could be expanded if
o At closure, the tailings surface will be covered to facilitate the re-establishment of
vegetation on the area.
o Operational and post-closure water treatment is not expected to be required.
o The Bird Brook tailings area in relation to the planned open pit and the process plant
area are outlined on the next page.
7. Financial Model - Spreadsheet
Contributor: Jack Marr M.Sc., P. Geo
Geodex Minerals Ltd.,
450 – 800 West Pender Street
Vancouver, B.C. V6C 2V6
Sisson Brook – Technical & Economic Update
Basis of Financial Model
This financial model incorporates the data provided by the several participants in this technical and
economic update where such data updates the assumptions made in a Technical Report by Wardrop
dated November, 2007 . The purpose of the model is to evaluate the effects of updated price
assumptions and operational and cost factors on cash flow over a 20 year period and to calculate an
internal rate of return (“IRR”) and a net present value (“NPV), enabling Geodex management to decide
whether or not to proceed to pre-feasibility studies. The model takes no account of taxes or provincial
The model is based on the following:
1. Currency is US$. Operating costs originating in CDN$ have been converted to US$ at an
exchange rate of 1 CDN$ = 0.85 US$.
2. Tungsten is priced at an ammonium para tungstate (APT) price of US$ 220 per metric tonne
unit (mtu) of WO3 in concentrate which is about US$ 10.00 per lb. of WO3. A deduction of
US$ 50.00 per mtu of WO3 (US$ 2.27/lb.) is made for offsite costs (freight, conversion by
buyer to APT, sales etc.). The deduction is a weighted blend of US$ 40.00 for gravity
concentrate (65% WO3 grade) and US$ 60.00 for flotation concentrate (50% WO3 grade).
3. Molybdenum is priced at US$ 15.00/lb. of Mo. Offsite costs (freight, conversion to MoO3
by buyer, sales etc.) are assessed at 8% of shipped gross value which amounts to US$
1.20/lb. of Mo.
4. Mining rate is 20,000 tonnes/day, 350 days/year for 20 years as per the mining schedule
tabled elsewhere in this report..
5. After crushing and sizing the ore passes through ore-sorters prior to further beneficiation,
losing about 50% of its weight in the process.
6. Overall recoveries (mill feed to bagged concentrate) of 73.9% for tungsten and 70.4% for
molybdenum – are based on a metallurgical balance provided by Bolu Consulting
Engineering Inc. (“Bolu”). These recoveries the product of ore sorting (96%) and gravity plus
flotation (77%) recoveries for tungsten and the product of ore sorting (83.8%) and flotation
(84%) recoveries for molybdenum.
7. Mine operating costs have not been revisited and remain CDN$ 1.30/tonne (US$ 1.11)
mined as per Wardrop 2007.
8. Overall beneficiation costs were provided by Bolu: CDN$ 4.66/tonne processed ( US$ 3.96).
9. General & administration costs were provided by Bolu: CDN$ 0.66/tonne processed (US$
10. Preproduction capital costs were provided by Axxent Engineering Limited (“Axxent”): US$
341 million including a 30% contingency allowance. Owners costs include US$ I million for
environmental costs during construction.
11. Sustaining (and sinking fund provision for reclamation) capital was assessed at 2.5% of
original direct capital, per production year (starting Year 2). More detailed estimates are
unavailable at this time.
12. Working capital was assessed at 25% of Year 1 operating costs which is recovered in Year 20.
More detailed estimates are unavailable at this time.
13. The development of the mine starts in Year minus 2 and IRR and NPV calculations start in
this year. Pre-feasibility and feasibility costs are regarded as sunk costs for the purposes of
this analysis and do not show in the model. These costs are incurred to determine whether
a production commitment is justified and might be incurred without such a decision being
The following table sets out the main elements of the financial model :
Units Yearly Average 20 Year Totals
Net Revenue: Tungsten $US x 1000 1,597,657
Net Revenue: Molybdenum $US x 1000 956,117
NET REVENUE: TOTAL $US x 1000 2,553,774
OPERATING CASH FLOW $US x 1000 1,610,464
TOTAL PRE PRODUCTION CAPITAL COSTS $US x 1000 -- 341,000
Sustaining Capital $US x 1000 4,513 90,250
NET CASH FLOW $US x 1000 1,179,214
Project Unleveraged IRR from Year -2 % --
NPV @ 8% from Year -2 $US x 1000 --
NPV @10% from year -2 $US x 1000 $277,102
Preproduction Capital Repaid During Year YEAR 4
Accompanying this section are:
Summary Sheet : summarizes the main ingredients of the financial model
Variables: sets our all of the variables and constants used as input for the model
Model Page 1: spreadsheet showing cash flow and financial parameters (Years 1 to 10)
Model Page 2: spreadsheet showing cash flow (Years 11 to 20)
What-If Tables: 12 tables each examining the sensitivity of incremental changes from + 50% to – 50% in
the base case of a major parameter : W price, W overall recovery, W sorter recovery, W grade, Mo Price,
Mo overall recovery, Mo sorter recovery, Mo grade, pre production capital cost, operating costs,
exchange rate on operating costs, stripping ratio.
Charts: graphical representation of the What-If tables.
8. Recommendations to Pre-Feasibility
Contributor: Jack Marr M.Sc., P. Geo
Geodex Minerals Ltd.,
450 – 800 West Pender Street
Vancouver, B.C. V6C 2V6
The spreadsheet in the last section is based largely on a series of new test results for Sisson
Brook and a set of independent evaluations by independent engineers. These carry the project
well beyond the 2007 scoping study. The analysis indicates an NPV (8% discount rate) for the
Sisson Brook deposit of $US 372 million ($Can 438 million, using an 0.85 exchange rate)) and an
IRR of 23 %. Payback period is estimated to be in the fourth year. This is sufficiently robust to
recommend an immediate start to the Pre-Feasibility process. At this time, completion of Pre-
Feasibility by the fourth quarter (Q4) of 2009 seems reasonable.
This baseline study has demonstrated project viability and strength but will mainly position the
project for later work. Potential project improvements include reducing the contingency
markup with additional metallurgical and pre-concentration testing, more detailed design and
costing for the site and process plant equipment and more study of the waste/tailings option.
We should develop stronger cash flows by increasing cutoff grades in the high margin early
years to boost revenue. We should examine the use of stockpiles to modify production as prices
change in relation to the world’s steel industry. Geotechnical engineering for pit slopes and
foundations should continue and the environmental work should be re-instated. The company
should move more strongly into the downstream marketing/ offtake agreement/end user area.
Optimal external expenditures to the Pre-Feasibility stage (Q4 2009) are estimated as below.
These do not include Geodex corporate costs or contingency.
Contractor Work Budget $Can
TBD Resource/Block 25,000
SGS/Terravision Metallurgy/Pre-Conc. 250,000
TerrAtlantic Geotech/ 150,000
Rescan Environmental 225,000
Axxent Engineering/Report 200,000
Bolu Engineering Process/Capex/Opex 100,000
TBD Marketing 50,000
Geodex Field Costs 2009 200,000
This project has the benefit of good logistics and a very benign development environment in
one of Canada’s poorer provinces. It also has considerable size and a right-at-surface open pit
situation which is likely to give the project long life and carry it through several metal price
9. After Pre-feasibility – What happens next?
Contributor: Michael Macleod
Michael E MacLeod Professional Consulting Services,
#7, 15188 62A Avenue, Surrey, B.C., V3S 1W7
A successful Preliminary Feasibility Study of the Sisson Brook project lays the foundation for subsequent
social, environmental/regulatory, and technical work required for receipt of all government approvals
and making an Investment Grade Feasibility Study (IGFS). It also provides the basis for acquiring the
funding for the project (or terminating work or selling the asset in the event of an unfavorable result);
and generates financial market momentum for improving the Company’s share price.
Time frame and cost for an IGFS are frequently underestimated.
Overall Time Frame : 3 to 5 years
Estimated Total Cost : $ 15.0 to $ 20 million
A great deal of work is required in three main arenas: Environmental/Regulatory, Engineering, and
The Environmental/Regulatory arena
Systematic data collection and assessment. Baseline social and environmental sampling and
Static and kinetic testing for acid rock drainage potential, geotechnical testing for slopes, water
management and foundations.
Preparation of documents containing the required information and presented in an acceptable
format for distribution and review.
Application Review by Provincial and Federal Agencies and General Public.
Stakeholder Consultation – Public and First Nations.
Application Approval by Provincial and Federal Governments.
Permitting Time : 2 to 5 years (depending on the complexity and political sensitivity of the
Estimated Cost : $ 5.0 million
The Engineering arena
Confirm the viability of the extraction process from bench to commercial size scale-up. Pilot
plant test most likely.
Waste/tailings management plan.
Facilities and infrastructure design. Examine in detail equipment specs and sizes and optimize to
metallurgy. Produce reliable capital and operating costs.
Product quality, marketing and project development plans.
Financial risk/reward model to support the IGFS.
Engineering Time : 1 to 3 years. (depending on sponsor’s schedule, funding and contractor
Estimated Cost : $ 6.0 million
The Financing arena : -to acquire interim program funding, and secure full project development funding,
subject to a favorable IGFS and receipt of government approvals.
Securing a Financial Advisor;
Risk/Reward Trade-Offs and Strategies;
Retail Investor and Current Stockholder Management;
Share Dilution Aspects;
Institutional Investor Acquisition and Management;
End User/Strategic Partnering or Joint Venturing Strategies;
Potential for Government Participation and/or Support;
Debt/Equity Mix. Sources to coincide with Environmental/Regulatory Approvals and IGFS report
Financing Terms; and
Investor Friendly Financial Model;
Funding Time : 1 to 3 years (depending upon management credibility, individual investor
appetite, global economic conditions, political sensitivity, and competing opportunities).
Estimated Cost : $ 4.0 million (including corporate overhead).
Total Estimated Cost : $ 15.0 million
Contingency $ 3.0 million
TOTAL $ 18.0 million