Storuman
Location plan

Location plan

Storuman Regional Map

Storuman Regional Map

Storuman - Mine Concession and Preliminary Infrastructure

Storuman - Mine Concession and Preliminary Infrastructure

Mineralisation in Close up

Mineralisation in Close up

Mineralisation in drill core

Mineralisation in drill core

Landscape over Storuman

Landscape over Storuman

Storuman Railhead

Storuman Railhead

Storuman

Storuman

Storuman - Example Long Section

Storuman - Example Long Section

Storuman - Example Cross Section

Storuman - Example Cross Section

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Storuman

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Introduction

The Company’s 100% owned Storuman Project is located in north central Sweden and is linked by the E12 highway to the port city of Mo-i-Rana in Norway and by road and rail to the port of Umeå on the Gulf of Bothnia. A bulk rail terminal, constructed in 2012, 25km from the project site is likely to become an important factor in the cost-effective delivery of fluorspar to the key European fluorspar market.

Scoping Study Highlights

 BASE CASE
Open-pit mineable tonnes (million tonnes)17.96
Head-grade (% CaF2)12.3%
Metallurgical recovery81.9%
Average Annual Production of Acid - Grade Fluorspar103,000 tonnes/yr
Mine Life18 years
Gross Cash generated over Life of Mine (LOM)$616 million
Net Cash generated over LOM$137 million
Initial Capital Costs (Capex)$ 46 million
Average Annual Net Operating Cash Flow Years 1-5$ 17 million/yr
NPV (8% discount rate) *$ 33 million
IRR (ungeared, 100% equity)24.1 %
Payback< 3 years
* Based on a concentrate selling price (CIF Rotterdam) equal to the June 2010 price for Chinese fluorspar (CIF Rotterdam) of $357.50 published in Industrial Minerals Magazine (the back calculated equivalent mine-gate price used in the Scoping Study is US$303/t) 
Scoping Study highlights ($ = US dollars, all Pre-Tax)

Mining

A conventional open pit strip mining operation of 1.0 million tonnes per annum (Mtpa) is envisaged for the Project, with a life of mine exceeding 20 years. Waste rock material generated from the stripping operations will be used to construct the tailings storage facility and excess waste material will be directly backfilled into the open pit during operations, effectively progressing pit closure during mining operations.

The primary mining operations will consist of drilling, blasting, loading and hauling of ore and waste materials with free digging envisaged for the glacial till and shale overburden. Mining is envisaged to be undertaken by a mining contractor to reduce pre-production capital expenditure.

Based on a preliminary Whittle pit optimisation carried out by SRK in March 2011, a total mineable tonnage of 27.8 Mt grading 10.2% CaF2 and producing 2.3 Mt of concentrate can be economically extracted using the Scoping Study metallurgical recovery of 81.9%. The average stripping ratio is 0.8 for the life of mine which equates to 22.2 Mt of waste produced.

Mineral Processing

A 1.0 Mtpa flotation process plant is envisaged for the Project with three stages of crushing, primary ball mill and two regrind stages. Ore will be delivered to a run of mine (ROM) pad and fed to the plant via a front end loader. The final concentrate product will be transported to a Swedish port for export.

Metallurgical testwork conducted by SGS Minerals Services (Canada) during 2008-2010 was directed and reviewed by Malcolm Crawford of Delta Minerals Limited, a recognised fluorspar processing specialist based in England. This testwork formed the basis of the conceptual process flowsheet used in the Scoping Study and shown below.

The concentrate produced by the process flow sheet results in a fluorspar concentrate that meets concentrate product specifications for sulphur, silica and calcium carbonate with a process recovery of 81.9%. As a result of the need for fine grinding the process flow sheet results in a fluorspar concentrate that is finer grained than traditionally supplied to the market. Further work is described below within the Preliminary Feasibility section.

Storuman Market

The Storuman project is a large fluorspar deposit containing 2.3 million tonnes of recoverable, open-pit mineable, fluorspar. With a conceptual Acid-spar output of 100,000 tonnes per year Storuman would be a medium-scale producer. The relative proximity of Storuman to Europe and North America is seen as an advantage, and local deep-water ports will allow product to be delivered to any international market assuming price and suitability is acceptable. It is also anticipated that Sweden’s low political risk; excellent regional infrastructure; and long history of mining may offer strategic advantages over some traditional sources. A newly constructed bulk rail terminal 250km from the project site is likely to become an important factory in the cost-effective delivery of fluorspar to the key fluorspar markets.

Project Risks

The completion of the Scoping Study on the Storuman Fluorspar Project by Scott Wilson Limited is an important milestone in the evaluation of this project and provides the Board of Tertiary Minerals with an important document for decision making on the merits of further investment in the Project.

Scott-Wilson further comments that the Scoping Study and its economic analysis (which included cost accuracies are in the region +/- 35% based on 2nd quarter 2010 estimates):

As such Scott Wilson caution that, although in their opinion the available geological information at this stage of the project does not fully reflect the potential of the Storuman fluorite deposit, there is no certainty that the economic forecast will be realised.

JORC Compliant Mineral Resource Estimate

In March 2011 the maiden JORC compliant Mineral Resource was estimated for the Storuman Fluorspar Project, increasing the Mineral Resource by 28% compared with the Scoping Study.

Classification Million Tonnes (Mt) Fluorspar (CaF2%)
Indicated 25.0 10.28
Inferred 2.7 9.57
Total 27.7 10.21

Table 1 - JORC Mineral Resource Estimate effective 25th March 2011

The Mineral Resource Estimate is based on the results from 56 diamond drill holes completed by the Company in 2008 and 2010. All tonnage in the estimate falls within a Whittle optimised open-pit with low waste overburden strip ratio (0.8 tonnes of overburden per tonne of mineralisation). 

By definition, a JORC compliant Mineral Resource must have reasonable prospects for eventual economic extraction and portions of a mineral deposit that do not have such prospects must be excluded from the estimate. 

To determine the Mineral Resource Statement, a Whittle pit optimisation exercise is used to determine the proportion of the material that has a reasonable prospect of economic extraction. The ore tonnage and grade generated by the pit optimisation process is the Mineral Resource Estimate. It is classified as either “Inferred” or “Indicated”. The Minerals Resource at Storuman is 90% in the higher “Indicated Mineral Resource” category which means that confidence in the estimate is sufficient to allow the application of technical and economic parameters, and to enable an evaluation of economic viability.

Whittle Parameters

To generate the optimised ore tonnage and grade the Whittle optimisation requires the input of reasonable processing and mining cost parameters in addition to appropriate pit slope angles and processing recoveries. The table below shows the assumptions applied in the Whittle optimisation

Revenue
CaF2 Selling Price (mine-gate)$303 / t
Govt Royalty0.2%
Private Royalty0%
Discount Rate0%
Process and Mining Statistics
Slope Angle27° in Glacial Overburden, 45° in Shale and 50° in all other lithologies
Mining Recovery97%
Mining Dilution3%
Process Recovery81.9%
OP Mining Cost at surface.2.6 USD/tonne
Incremental Mining Cost above surface0.025 USD/tonne/5m
Incremental Mining Cost below surface0.00 USD/tonne/5m
Processing Cost$10.6 USD / tonne processed
General & Administration3.1 USD / tonne processed
Concentrate Grade97.0%

Exploitation (Mine) Permit Application

The Company submitted its Exploitation (Mine) Permit application in July 2014 to the Swedish Mining Inspectorate and following an extensive consultation process the 25-year Exploitation (Mine) Permit was granted on 18 February 2016.

However, as a consequence of the Supreme Court’s decision to overturn the grant of a third-party mining company’s Mine Permit in the south of Sweden (Norra Karr Mine Permit - rare earth element project, owned by Leading Edge Minerals) the government returned the Storuman Mine Permit case, along with many other cases, back to the Swedish Mining Inspectorate for re-assessment in December 2016. The re-assessment is intended to consider the impact of mining in the concession area on a wider surrounding area. Earlier this year the Swedish Mining Inspectorate requested additional information from the Company relating to the original Environmental Impact Assessment (EIA) and the wider area. The Company provided the additional information to the Swedish Mining Inspectorate in the form of an updated EIA in May 2017. The additional information was accepted by the Mining Inspectorate which subsequently invited all stakeholders to provide comments on the application and additional information, with the deadline for responses being 27 October 2017.

In response to stakeholder responses the Swedish Mining Inspectorate has now requested further detail from the Company in relation to the impact of proposed operations on the wider surrounding area. Given that the level of detail now required for the wider area has changed in response to the new case law, the Company continues its dialogue with the key stakeholders, Swedish legal advisors and the Mining Inspectorate to establish the exact requirements prior to the work being completed and submitted. The Company has been granted an extension by the Mining Inspectorate until 16 April 2018 to enable completion of its dialogue and preparation of data thoroughly and to a high standard.

Whilst the process is slow and frustrating, the Company continues to co-operate with the Mining Inspectorate and believes that the Mine Permit application and EIA are of a very high standard. The Company also continues to have the support from the majority of key stakeholders at Storuman, with the notable exception of the Sami reindeer herding community, and remains hopeful of a positive resolution to this in 2018. It is however worth noting that the Company has no influence on the speed at which the re-assessment of the grant of the mining permit is being processed by the Authorities.

Any ratification of the grant of the mining concession will, however, be open to appeal and the Company will therefore not spend any further money on exploration or development of the Storuman Fluorspar Project until the matter is resolved.

Preliminary Feasibility Study

The Company contracted the services of a specialist mineral processing consultancy to complete the final phase of Preliminary Feasibility Study (PFS) level metallurgical testwork with two key objectives: 

Whilst the key chemical specifications have been met and improvements have been made to the processing flow sheet, the test work is producing a fluorspar concentrate which is still finer than the ‘typical’ market specification. It is critical at this stage that the Company engages with key end users to discuss their technical requirements and the suitability of the Storuman fluorspar concentrate. The Company has therefore completed a programme of constructive discussions and plant visits with various end users. Based on the discussions and advice provided by the end users the Company, together with its specialist mineral processing consultancy, will need to complete a detailed work programme with the following objectives: 

Before progressing onto the outstanding phases of the Preliminary Feasibility Study it is critical that each phase of the detailed testwork programme is successful. All PFS work is currently on hold until the Exploitation (Mine) Permit matter is fully resolved.