Bankable feasibility study
  •  
  • Bankable feasibility study

    A bankable feasibility study (“BFS”) with AACE Class 3 estimates for a 16.2Mwmt/a operation considering a 10 year mine life based on the currently available amount of Indicated resources was completed in March 2012. A 15 year scenario was also evaluated to demonstrate the greater potential of the asset. Testwork by SGS Lakefield has confirmed the final product from Isua to be a premium quality blast furnace grade pellet feed with 70.2% of Fe and less than 2.0% Silica (SiO2) and Alumina (Al2O3.) Sulphur levels will be either 0.12% or 0.3% depending on the grade of sulphur in the ore processed.

    The detailed results of the BFS for the next stage of the project are outlined below.

    Highlights of the Bankable feasibility study

    Study date

    BFS March 2012

    Annual production (Mwmt/a)

    16.2

    Mine life (years)

    10 with possible extension to 15

    Operating cost  (USD/t concentrate)

    46

    Capital expenditure (USD billions)

    2.35

    Capital Intensity (USD/tpa)

    157

     

    Resources and mine life

    As part of the BFS programme, 7,656m of drilling was completed during the summer of 2011 which forms the basis for an updated resource statement. Snowden now estimate a total resource for Isua of 1,107Mdmt grading 32.3% Fe. The resource comprises 380Mt of Indicated resources which are sufficient to support a 10 year mine life. Potential to extend the mine life could be achieved though further drilling necessary to convert Inferred resources into the Indicated category.

    Summary of Isua Mineral Resource at March 2012 reported at a 20% Fe cut-off grade and constrained inside an ultimate pit shell

    Category

    Tonnes (Mt)

    Fe (%)

    Al2O3 (%)

    SiO(%)

    S (%)

    P (%)

    Indicated

    380

    32.6

    2.4

    41.8

    0.23

    0.03

    Inferred (1)

    727

    32.1

    2.3

    42.3

    0.22

    0.03

    Total

    1,107

    32.3

    2.4

    42.2

    0.22

    0.03

    (1)    83% or 607Mdmt of the inferred resources are extrapolated beyond the current drilling coverage.

    The 2011 drilling campaign also confirmed additional mineral resource potential originally indentified by Rio Tinto in 1997. This area of mineralisation potential has been identified as a down dip extrapolation of the Isua banded iron formation (“BIF”) bearing the existing resource. Part of this mineralisation potential is comprised of an area of hematite BIF which has been interpreted at the top of the BIF unit. This appears to be underlain by more typical magnetite BIF.

    Summary of the mineralisation potential at the Isua deposit at end December 2011 (2)

    Potential mineralisation type

    Potential tonnage range (Mt)

    Potential Grade Range (Fe%)

    Magnetite BIF

    800 to 1200

    30-33

    Hematite BIF

    150 to 300

    >35

    (2)    Snowden considers this material to be an indication of Mineralisation Potential only and makes no guarantees that this material can or will be converted to a Mineral Resource or an Ore Reserve at any time in the future following the collection of additional data.

    BFS results

    The March 2012 BFS considered a 16.2Mwmt/a operation with a mine life of 10 years. The main changes, when compared with the February 2011 scoping study are the reduced mine life as well as increased, albeit more accurate, operating costs and capital expenditure.

    Financial analysis

    Two pricing scenarios were considered in the study. The base case scenario considers the sale of 5Mtpa of low sulphur pellet feed into Europe and 10Mtpa of higher sulphur product into China with a more conservative case assuming the sale of all products into China. Long term market study and price forecasts were undertaken by Raw Materials Group (“RMG”). RMG assume a conservative premium of USD3 per Fe unit above benchmark with freight costs of USD34/wmt for capesize shipping to China and USD9/wmt into Europe. Three scenarios were considered for the purposes of financial modelling. The base case scenario assumes a 10 year mine life and pricing based on sales of product into both Europe and China. Two further scenarios were considered both incorporating Inferred resources into the mineable resource to achieve a 15 year mine life.

    The results are shown below. Results of Isua Project financial analysis (after tax)
     

    Base case

    Extended mine life

    100% sales to China

    Mine Life

    10 years

    15 years

    15 years

    Pricing assumption

    5Mtpa to Europe 10Mtpa to China

    5Mtpa to Europe 10Mtpa to China

    15Mtpa to China

    Project IRR (100% equity)

    18.7%

    20.9%

    19.9%

    Project NPV (8% discount rate, USD m, 100% equity)

    1,755

    2,366

    2,135

    Equity IRR (70% debt : 30%equity)

    30.1%

    31.6%

    30.1%

    Project payback period (in years of operation)

    3.5 years

    3.5 years

    3.6 years

    Permitting and financing

    In October 2013, we were granted an Exploitation Licence for Isua. We are now working to attract strategic and potential financing partners to the project as well as completing an Impact Benefit Agreement (IBA) and the final construction permitting. We are flexible in our thinking and considering all options for the project

  • 110km

    Distance from mine to deepwater port

    950-1500

    Further mineralistion potential at Isua