Preliminary Economic Assessment Summary
The PEA, initiated in late 2020, was produced by a team of independent consultants that possess extensive expertise in their respective fields. Further details on the contributors can be found in the Qualified Persons section of this news release.
All amounts are in Euros unless otherwise specified. Base case economics were calculated using a ferrovanadium (“FeV80”) price of US$32.00 per kilogram and pig iron price of US$450 per tonne. An exchange rate of EUR:USD of 1.18 was used. The effective date of the PEA is May 4, 2021 and a technical report relating to the PEA will be filed on SEDAR within 45 days of this news release.
The PEA’s highlights include the following estimates:
- Life of mine (“LOM”) average annual production of 4.6 kt of FeV80
- LOM average annual co-product production of 329 kt of pig iron
- 20.25-year mine life
- 10,400 tpd processing operation over the life of mine
- After-tax NPV (8%) and IRR of €190 million and 12.2%
- Average all-in sustaining co-product cash costs of €15.2 /kg FeV80 and €210.7/t pig iron
- LOM revenue mix of 46.7 % FeV80, 50.8 % pig iron and 2.6 % other by-products
- Initial capital costs of €597 million
- Life of mine sustaining capital and closure costs of €94 million
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that the PEA will be realized.
Table 1: Summary of Mustavaara Economic Results by FeV80 and Pig Iron Price
|Percentage of Base Case Prices||80%||100%||120%|
|FeV80 (US$ per kg)||US$25.60||US$32.00||US$38.40|
|Pig Iron (US$ per tonne)||US$360||US$450||US$540|
|Pre-Tax NPV (8%) (€M)||€ (88)||€286||€661|
|Post-Tax NPV (8%) (€M)||€ (115)||€190||€491|
Table 2: Mustavaara Life of Mine Capital Expenditure Estimate Breakdown
|Initial Capital (€M)|
|Mine and Beneficiation Plant||€109M|
|Infrastructure and Utilities||€43M|
|Contingency (10%) (1)||€54M|
|Total Initial Capital||€597M|
|Sustaining Capital and Closure Costs (€M)|
|Life of Mine Sustaining Capital||€71M|
|Average Annual Life of Mine Sustaining Capital||€4M|
|Closure Costs (2)||€23M|
Note: Totals may not add up due to rounding.
(1) The contingency allowance was added as a flat percentage on top of base cost. Percentage is based on assessed uncertainty in the cost areas.
(2) A closure deposit (including VAT) of €1M is paid annually to the Finnish government. After closure is completed the deposit is refunded.
Table 3: Summary of Mustavaara Operating Cost Estimates and Cash Costs
|Average Operating Costs||Years 1-20|
|Mining Costs per Tonne Material Moved||2.2 €/t|
|Mining Costs per Tonne of Processed Material||6.0 €/t|
|Costs Per Concentrate Tonne to Smelter||87.7 €/t|
|Mining Costs||37.9 €/t|
|Beneficiation Costs||24.2 €/t|
|Logistics & Admin Costs||25.5 €/t|
|Smelting Cost Per Tonne Concentrate||190.6 €/t|
|Average Cash Costs [Per unit of production, not nominal]||Years 1-20|
|Co-product Cash Cost FeV80 (€/kg)||14.6 €/kg|
|Operating Costs||15.3 €/kg|
|0.15% Extraction Royalty||0.006 €/kg|
|By-product Credits||-0.7 €/kg|
|Co-product Cash Cost Pig Iron (€/t)||203.6 €/t|
|Operating Costs||213.3 €/t|
|0.15% Extraction Royalty||0.09 €/t|
|By-product Credits||-9.8 €/t|
|All-in Sustaining Cash Cost FeV80 (€/kg)||15.2 €/kg|
|Co-Product Cash Costs||14.6 €/kg|
|Sustaining Capex Cost||0.4 €/kg|
|Closure Cost||0.1 €/kg|
|All-in Sustaining Cash Cost Pig Iron (€/t)||210.7 €/t|
|Co-Product Cash Costs||203.6 €/t|
|Sustaining Capex Cost||5.3 €/t|
|Closure Cost||1.7 €/t|
Note: Totals may not add up due to rounding. Operating costs, royalties, and by-product allocation 50%/50% to FeV80 and Pig Iron products.
Cash Cost: (Operating costs including transportation and refining costs + Royalties – By-product credits) / Payable Product.
All-in Sustaining Cash Cost: Adds sustaining capital and closure costs to the Co-product Cash Costs.
Mining and Processing Facility
The PEA contemplates large-scale open pit mining using a 100% owner operated equipment fleet. Mine production and mill feed schedules were estimated from the phase resource tabulations using a declining cut-off grade strategy to maximize net present value for a processing rate of 10.4 ktpd. Pit limiting floating cone shells used to develop the mine plan were based on US$25.50/kg FeV80 price and US$340/t pig iron prices.
The ferrovanadium production process consists of a concentrator plant at the Mustavaara site and smelter / hydrometallurgical plants in Raahe. The concentrator plant process is based on crushing, two-stage grinding and multi-stage magnetic separation to produce iron/vanadium concentrate. The concentrate would then be transported approximately 250 km to Raahe using trucks.
The scientific and technical information contained in this news release pertaining to the Project has been reviewed, verified and approved by the following Qualified Persons as defined by NI 43-101: Ville-Matti Seppä, EurGeol, (Mineral resources, process and Economic analysis) of AFRY Finland Oy, Eemeli Rantala, P.Geo (Environment) of AFRY Sweden Ab and Pekka Lovén, MAusIMM (Mine design) of PL Mineral Resources Services. All the Qualified Persons are independent of Strategic Resources Inc.