Northern Graphite Announces Significant Increase inMeasured and
posted on
May 07, 2013 09:36AM
Recently announced significant increase in estimated resources
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OTTAWA, ONTARIO--(Marketwired - May 7, 2013) - Northern Graphite Corporation (TSX VENTURE:NGC)(OTCQX:NGPHF) is pleased to announce a new resource estimate for the Bissett Creek graphite project based on results from a recent 61 hole, 3,782 meter drill program. The drill program successfully achieved its objective of upgrading a significant portion of inferred resources to the measured and indicated categories. Measured and indicated resources are now estimated at 69.8 million tonnes grading 1.74% graphitic carbon ("Cg") based on a 1.02% Cg cutoff grade compared to the previous estimate of 26 million tonnes grading 1.81% Cg at a cutoff of 0.98% Cg. There are an additional 24 million tonnes of inferred resources grading 1.65% Cg (at a 1.02% Cg cutoff) in the new resource estimate.
The mine plan in the existing bankable Feasibility Study ("FS") will be revised based on the new resource model and the FS project economics updated. The current mine plan includes 1.5 million tonnes of inferred resources that are treated as waste with zero grade and it excludes a substantial amount of higher grade resources previously categorized as inferred. It is estimated that revised FS economics will be available in 4-6 weeks.
The revised FS economics will also contain a number of modifications to the original capital and operating cost assumptions. Contract mining will be replaced by owner mining which is expected to reduce operating costs by over $100 per tonne of concentrate. Approximately $7 million in capital will be added for mining equipment but will be substantially offset by a number of reductions including removal of costs for detailed engineering, which is already underway, and modifications to the SAG mill drive and discharge layout. The Company now plans to build a compressor station at the TransCanada pipeline and transport compressed natural gas ("CNG") to site by truck due to a substantial increase in the estimated cost of a pipeline. The CNG option will result in slightly higher capital and operating costs than those used in the FS.
Gregory Bowes, CEO, commented that: "The objective of the revised FS economics is to offset the effects of a recent decline in the graphite price which we feel is at or near the bottom of the cycle. It is anticipated that the new model will show an increase in grade and throughput, a reduction in costs and a much longer mine life."
Bissett Creek Resource Estimate, May 6, 2013 | ||||||
Measured + Indicated Resources | Inferred Resources | |||||
Cutoff | Tonnage | Cg% | In Situ Graphite (t) | Tonnage | Cg% | In Situ Graphite (t) |
1.02 | 69,791,000 | 1.74 | 1,213,000 | 24,038,000 | 1.65 | 396,000 |
1.50 | 37,565,000 | 2.14 | 803,000 | 11,971,000 | 2.02 | 242,000 |
1.75 | 23,439,000 | 2.45 | 574,000 | 6,274,000 | 2.39 | 150,000 |
2.00 | 15,902,000 | 2.73 | 435,000 | 3,564,000 | 2.79 | 100,000 |
Notes: | Resource shell is based on Measured, Indicated and Inferred material, tonnages rounded to the nearest thousand. | |||
Graphite price used is US$1,800 per tonne with an exchange rate of $1Cdn=$1 US. | ||||
Dilution and ore loss are considered to be zero. | ||||
Feasibility Study costs and information have been used for Resource Shell generation: | ||||
Overburden Mining Cost | $1.85 | per tonne material | ||
Waste Mining Cost | $3.24 | per tonne material | ||
Ore Mining Cost | $4.15 | per tonne ore | ||
Process Cost | $9.61 | per tonne ore | ||
General and Administrative | $3.41 | per tonne ore | ||
Recovery | 95% | |||
Royalty | $20 | per tonne of concentrate | ||
No mining restrictions relating to permitting were applied. | ||||
Wall slopes of 45 degrees in rock and 30 degrees in overburden. | ||||
Base mining cutoff of 1.02% Cg. |
Mineral resources are estimated in conformance with the CIM Mineral Resource definitions referred to in NI 43-101 Standards of Disclosure for Mineral Projects. Pierre Desautels, P.Geo., Principal Resource Geologist, and Gordon Zurowski, P.Eng., Principal Mining Engineer, both of AGP Mining Consultants and Qualified Persons under NI 43-101 who are independent of the Company, have prepared and authorized the release of the mineral resource estimates presented herein. This mineral resource estimate is an update of the G Mining Services Inc. NI 43-101 resource estimate presented in the Feasibility Study dated August 23rd, 2012.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The quantity and grade of reported inferred mineral resources in this estimation are uncertain in nature and there has been insufficient exploration to define these inferred mineral resources as indicated or measured mineral resources and it is uncertain if further exploration will result in upgrading them to indicated or measured mineral resources.
SEE ADDITIONAL NOTES ON RESOURCE ESTIMATION METHODOLOGY AT END OF PRESS RELEASE
Environmental Permitting
On October 31, 2012, the Company submitted the Mine Closure Plan ("MCP") for the Bissett Creek project to the Ministry of Northern Development and Mines. The Government of Ontario advertises a 45 day turnaround as part of their efforts to promote the province as a mining friendly jurisdiction. However, the process is still ongoing despite Bissett Creek being a relatively benign operation with no major environmental issues. It has strong community support and consultations with First Nation communities have been positive and constructive. The Company is hopeful the MCP will be approved this month which would enable construction to commence, subject to financing. The MCP is an all-encompassing document that describes in detail, the nature of the operations that will be carried out, the current baseline environmental conditions, and the Company's plan for rehabilitating the site and returning it to its natural state. A number of other permits relating to air, noise, water, species at risk, etc. are required prior to the commencement of operations and follow in the normal course after acceptance of the MCP. Most of these issues are already addressed in the MCP.
Graphite Market Update
Prices have declined from their highs of approximately $2,800/tonne for high purity, large flake graphite to the $1,400 to $1,800/tonne range due to the slowdown in China and continued economic weakness in the US and Europe. It appears that prices are now close to the Chinese marginal cost of production. In addition, Chinese costs are increasing as mines get deeper and older, labour, power and transportation costs escalate, environmental regulations become more stringent and the country's currency appreciates. China currently produces 70% of the world's graphite and an export tax and a licensing system have been instituted to restrict exports and encourage value added processing in China. No new graphite mines were built during the past economic cycle and the supply situation will become more acute as economic growth recovers. Both the European Union and the United States have declared graphite a supply critical mineral.
Don Baxter, P.Eng., President of the Company and a "Qualified Person" under 43-101, is responsible for and has reviewed and approved the technical content of this press release.
Northern Retains Services of Renmark Financial
Northern is also pleased to announce that it has retained the services of Renmark Financial Communications Inc. ("Renmark") to handle its investor relations activities. In consideration of the services to be provided by Renmark, Northern has agreed to pay Renmark a retainer of $5,000 per month for May and June, unless extended by mutual agreement of the parties. Renmark does not have any interest, directly or indirectly, in Northern or its securities, or any right or intent to acquire such an interest.
Northern Graphite Corporation
Northern is a Canadian company that has a 100% interest in the Bissett Creek graphite deposit located in eastern Ontario and is well positioned to benefit from the favourable supply/demand outlook for graphite. Northern is the only graphite company to have completed a bankable Feasibility Study. Bissett Creek is a large flake, high purity, scalable deposit with low engineering, technical and political risk, reasonable capital costs and competitive operating costs. Additional information is available under the Company's profile on SEDAR at www.sedar.com and on the Company's website at www.northerngraphite.com.
This press release contains forward-looking statements, which can be identified by the use of statements that include words such as "could", "potential", "believe", "expect", "anticipate", "intend", "plan", "likely", "will" or other similar words or phrases. These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. The Company does not intend, and does not assume any obligation, to update forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by applicable securities laws. Readers should not place undue reliance on forward-looking statements.
Notes on Mineral Resource Estimation Methodology
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.