|August 27, 2013|
ROCKEX MINING ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT ON ITS 100% OWNED EAGLE ISLAND PROJECT
|TORONTO, ONTARIO - (Marketwired - Aug. 27, 2013) -|
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Rockex Mining Corporation ("Rockex" or the "Corporation") (TSX:RXM) is pleased to announce that it has received the results of a Preliminary Economic Assessment ("PEA") prepared by Met-Chem Canada Inc. ("Met-Chem") for the Corporation's 100% owned Eagle Island Project ( "Eagle Island") in northwestern Ontario. The National Instrument 43-101 compliant report (the "Report") summarizing the results of the PEA will be filed on SEDAR and Rockex's website within 45 days of this news release.
Highlights of the PEA Include:
The PEA is based on the production of 6 million tonnes of iron concentrate per year at a grade of 66.3% total iron ("Fe"). The average run of mine feed of 17.3 million tonnes per year used is based on mill recovery of 80% operating year-round from the Eagle Island deposit. The life of mine of 30 years was based on 512 million tonnes of in-pit resources at a grade of 28.9% Fe, less than half of Eagle Island's estimated Indicated Resources of 1,287 million tonnes at a grade of 28.39% Fe. Initial capital expenditures are estimated at $1.559 billion for the production of 6 million tonnes per year of iron concentrate. Using an average site operating cost of $36.63 per tonne, and assuming the iron concentrate sales price at $105USD FOB Sioux Lookout, calculated Net Present Value for the Eagle Island project is $3.9 billion (pre-tax) using a 5% discount rate and $2.2 billion (pre-tax) using an 8% discount rate.
In addition to the PEA, Rockex completed an updated independent mineral resource estimate by Met-Chem which has defined 1,287 million tonnes of Indicated Resources at a grade of 28.39% Fe and 108 million tonnes of Inferred Resources at a grade of 31.03% Fe. The updated resource is summarized in the Table below.
A trade-off study was conducted in the early phases of the PEA based on the preliminary information available at that time. The study investigated the feasibility of producing three different products: fines, pellets and hot briquetted iron ("HBI"). The study showed that further analysis is warranted for pellets and HBI, which Rockex will pursue throughout the course of its preparation of a Feasibility Study. Presently, the PEA is based solely on the production of a fines iron concentrate. However, more detailed study of the transformation of iron ore concentrate to HBI to supply the North American electric arc furnace industry and grey foundry industry is being commissioned. HBI is considered to be a cleaner, higher quality, finished iron product for the steel industry and is a perfect substitute for scrap steel. The HBI process requires access to an abundant and low cost source of natural gas. Considering Rockex's proximity to the TransCanada Natural Gas Pipeline, Rockex feels it is well positioned to produce HBI and leverage its proximity to transportation infrastructure to supply the North American market in the United States immediately south of the Great Lakes and in Canada.
Met-Chem evaluated the potential for an open pit mine at Eagle Island to produce 6 million tonnes of iron concentrate per year at a grade of 66.3% Fe. The mining method selected for the Project is a conventional open pit 'drill and blast' operation with rigid frame haul trucks (218 tonne payload) and hydraulic shovels. The pit design and mine plan were limited to a 30-year mine life, although the pit optimization showed that there are sufficient resources for a longer period. The designed pit includes 512 million tonnes of mineral resources with an average grade of 28.9% Fe and has a stripping ratio of 0.51:1. The pit will be developed in three phases in order to defer the construction of dykes and lake dewatering until after the commencement of mining operations. A causeway to access the pit will be constructed between Eagle Island and the south shore of Lake St. Joseph. An average run of mine feed of 17.3 million tonnes per year (47,500 tpd) is required, assuming a mill recovery of 80%.
The first objective of the metallurgical test work was to reproduce the test procedures developed by The Algoma Steel Company Ltd ("Algoma") in 1974 in order to achieve similar grades and recoveries from the current test program. The second objective of the test program was to test the composite sample's amenability to gravity and magnetic separation. The test work was undertaken by SGS Mineral Services in Lakefield, Ontario. Desliming test work yielded Fe recovery and grade results similar to those obtained by Algoma. Mineral processing estimates were based on metallurgical test work performed on composite samples from Rockex's Eagle Island Project. Results from the following tests were used as the basis for the PEA:
The concentrator will be located adjacent to the Eagle Island causeway. Mined mineralized material will be crushed using a gyratory crusher before being conveyed to the processing plant. The process consists of the following:
Dewatering, Product Storage and Railcar Loading
The dewatering, product storage and railcar loading facility, located at Sioux Lookout, will receive the concentrate via pipeline. The material will undergo the following steps:
Iron Concentrate Sales Price
Based on survey of recent studies, the selling price of the iron concentrate was established at $105USD FOB Sioux Lookout for the Eagle Island project. Sioux Lookout is connected by major rail lines to ports on the Great Lakes and the West Coast for shipping the concentrate to North American, European and Chinese markets.
Operating Cost Summary
The PEA operating costs were estimated based on economic assumptions shown below and estimates of consumable prices from suppliers. Average life-of-mine operating costs were estimated as:
Capital Cost Summary
PEA capital costs were estimated based on an adequate level of engineering for the mine, the process, the infrastructure and all services necessary to support the operation. Supplier quotes were used where available as was Met-Chem's cost database.
Other Economic Assumptions
Since the last resource estimate in 2011, Rockex has drilled an additional 6,917.9 m of core in 14 drill holes into the iron deposit located on Eagle Island. The cores from these 14 drill holes plus the cores from five twin holes drilled by Rockex in 2008 were used by Met-Chem to provide the resources estimate, in addition to the previous Algoma's holes drilled into the Eagle Island deposit These drill programs were highly successful in validating historical drilling results, increasing total tonnage and improving resource classification. The increased tonnage was a result from drilling along the lateral extensions of the deposit and at greater depths than the holes predating the 2011 program.
An updated independent mineral resource estimate by Met-Chem has defined 1,287 million tonnes of Indicated Resources at a grade of 28.39% Fe, and 108 million tonnes of Inferred Resources at a grade of 31.03% Fe. The resources estimate includes the Main Zone and South-east Zone deposits on Eagle Island only, and forms the basis for the PEA.
Resource Estimation Methodology
The mineral resource estimate for the Eagle Island Project included a total of 90 drill holes used for blocks interpolation, while some of the historical holes on Eagle Island for which no valid analytical data were available, were used for the geological interpretation. The drill data was used to perform traditional sectional 2D interpretation followed by generation of 3D solids. The geological solids were used to constrain the assays from the holes selected first for compositing and then for resource interpolation. Regular downhole compositing on nominal 3.05m (10 ft) sample lengths was used and variograms were calculated in order to analyze the spatial continuity of the mineralization and to determine suitable parameters for grade interpolation.
Regular 50 m x 50 m x 10 m block sizes were used for the block model. Search ellipses reflecting unique strikes to the portions of the deposit were used to constrain the interpolation. Structural domains were defined in order to account for the deformed nature of the mineralization and the resources were estimated using the inverse distance squared method. Met-Chem created a regression model between the density and the iron content based on 160 density determinations using the pycnometer method.
An Indicated Resource classification was assigned to blocks interpolated by a minimum of 6 composites and maximum search ellipse ranges of 400 m along the major axis, 300 m along the semi-major axis and 20 m along the minor axis. Inferred Resources were defined by search ellipsoids of the same size but with a minimum of 3 composites. The maximum number of composites allowed for each selected hole was set at 3. Mineral resources are reported to a cut-off of 10% Fe calculated using the economic parameters developed for this study, which corresponds to the grade at which a block will generate zero revenue after paying for mining and processing. The initial resources are not constrained within a pit shell. However, the resources were subsequently constrained to a pit shell by the mining engineers to allow pit optimization.
The quantity and grade of reported Inferred Mineral Resources in this estimate, which represents 7.7% of the total resources, are uncertain in nature. There has been insufficient exploration to define the 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 Resource categories.
The PEA includes Inferred Mineral Resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.
The mineral resource estimates discussed herein may be affected by subsequent assessments of mining, environmental, processing, permitting, taxation, socio-economic, legal, political and other factors. There is insufficient information available to assess the extent to which the potential development of the mineral resources described herein may be affected by these risk factors.
The mineral resources are reported in accordance with Canadian Securities Administrators ("CSA") NI 43-101 and have been classified in accordance with standards as defined by the "Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") CIM Definition Standards for Mineral Resources and Mineral Reserves." Mineral resources which are not mineral reserves do not have demonstrated economic viability.
The PEA was prepared under the supervision of Charles Cauchon, Eng. of Met-Chem. Mr. Cauchon is a Qualified Person as defined by NI 43-101.
Met-Chem's Yves A. Buro, Eng., and Schadrac Ibrango, P.Geo., Ph.D., are responsible for validating the geological interpretation and the database and for the mineral resources estimate.
Met-Chem's Ryan Cunningham, Eng., is responsible for supervising the metallurgical test work program and the process design.
Met-Chem's Jeffrey Cassoff, Eng., is responsible for supervising the mining.
Met-Chem's Alain Michaud, Eng., is responsible for supervising the costs estimation.
All the Qualified Persons cited above are independent of Rockex within the meaning of NI 43-101, Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators, and have reviewed and approved the contents of this news release.
Met-Chem is an internationally renowned consulting engineering firm established in 1969 to provide all phases of geology, mining, mineral processing and engineering services throughout the world. From its headquarters in Montreal, Met-Chem offers the mining industry professional expertise that covers scoping, pre-feasibility and feasibility studies, basic and detailed engineering, procurement and construction management, training, start-up, commissioning and operations assistance.
Rockex' Western Lake St. Joseph Project - which includes the Eagle Island Deposit, as well as additional potential deposits at Wolf Island and Fish Island - consists of a 100% interest in 23 contiguous mining claims and covers a nominal area of approximately 5,392 hectares located approximately 100 kilometres northeast of Sioux Lookout and 80 kilometres south-southwest of Pickle Lake.
Rockex also holds a 100% interest in three other iron projects in relative close proximity to Eagle Island and Fish Island in the Lake St. Joseph area: (i) East Soules Bay, a property consisting of 9 contiguous mining claims (1,408 hectares) in and along the eastern end of Lake St. Joseph, approximately 40 kilometres east of Rockex' Eagle Island Iron Project, (ii) the Doran Lake Property consisting of 4 contiguous mining claims (832 hectares) in and along the north shore of Doran Lake, south of Lake St. Joseph, approximately midway between the Eagle Island Iron Project and the East Soules Bay Project, and (iii) the Root Lake Project, a property consisting of 4 contiguous claims (832 hectares), approximately 100 kilometres north of Sioux Lookout near the central part of Lake St. Joseph. In addition, Rockex holds a 100% interest in a fifth iron project in Northwestern Ontario, the North Spirit Lake Property in the Buckett Lake and Hewett Lake Townships, Red Lake Mining Division, District of Kenora, consisting of eight contiguous mining claims (1,536 hectares) approximately 170 km northeast of Red Lake, Ontario.
Please visit the Corporation's website at www.rockexmining.com.
This news release may contain or refer to forward-looking information. All information, other than statements of historical fact, that address activities, events or developments that Rockex believes, expects or anticipates will or may occur in the future are forward-looking statements, including statements regarding the estimated resources, grades, recovery rates, production rates, rates of return, capital costs, operating costs, sales prices and other aspects of the PEA. This forward-looking information is subject to a variety of risks and uncertainties beyond Rockex's ability to control or predict that may cause actual events or results to differ materially from those described in such forward-looking information. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, Rockex disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although Rockex believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and, accordingly, undue reliance should not be placed on this forward-looking information due to the inherent uncertainty thereof.
Neither IIROC nor any stock exchange or other securities regulatory authority accepts responsibility for the adequacy or accuracy of this release.
Rockex Mining Corporation
President and Chief Executive Officer
Rockex Mining Corporation
Chairman of the Board
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