The Elk Creek Project’s Projected Economics
According to a positive CIM-compliant National Instrument 43-101 Feasibility Study, completed in 2017, the Elk Creek Superalloy Materials Facility is forecast to deliver robust economic returns. You can review the full text of the Revised Technical Report in regard to the Project Feasibility Study here. Highlights of the findings of the Feasibility Study are shown below.
Highlights of the Elk Creek Feasibility Study
(All currency figures are in US $ unless otherwise noted)
- Financial Returns: Pre-tax net present value (“NPV”) of $2.3 billion, at an 8% discount rate, with an internal rate of return (“IRR”) of 24.3%, and after-tax NPV of $1.7 billion, at an 8% discount rate, with an IRR of 21.7%, and an effective tax rate of 24.1%.
- Revenue: Gross Life Of Mine (“LOM”) revenue of $17.6 billion, with operating margin of $12.2 billion.
- CAPEX: Up-front direct capital costs of $705 million, in addition to indirect costs of $189 million, pre-production capital costs of $85 million, contingency of $109 million, and pre-production net revenue credit of $79 million.
- EBITDA: Averaged Earnings Before Interest, Taxes, Depreciation, and Interest (“EBITDA”) is $389.6 million per year over LOM. The averaged EBITDA margin (EBITDA as a percent of total revenue) for the project over LOM is 69.5%.
- Pre-Tax Payback Period Production Onset: 3.4 years (3.7 years after-tax).
- Production: On an annual averaged basis, estimated production and revenues are as follows:
- Ferroniobium (“FeNb”): annualized production rate of 7,055 tonnes at an averaged realized price of $39.60 per kilogram (“kg”) for contained niobium (65%), yielding annual gross revenue of $183.4 million.
- Scandium Trioxide (“Sc2O3”): annualized production rate of 103 tonnes at an averaged realized price of $3,675/kg of Sc2O3, yielding annual gross revenue of $378.3 million.
- Titanium Dioxide (“TiO2”): annualized production rate of 11,445 tonnes per year at an averaged realized price of $0.88/kg TiO2, yielding annual gross revenue of $10.1 million.
- Production Costs (net of TiO2 byproduct credit):
- $12.14/kg of niobium on a niobium-equivalent basis.
- $1,127/kg of Sc2O3 on a Sc2O3-equivalent basis.
- Mine Life: 32 years, producing over the LOM approximately 143,824 tonnes of payable niobium, 3,237 tonnes of Sc2O3, and 359,128 tonnes of TiO2.
- Mineral Resources and Reserves: Probable reserves of 31.7 million tonnes of ore at 0.79% niobium (Nb2O5), 71.6 grams per tonne (g/t) scandium (Sc), and 2.81% TiO2. Total indicated mineral resources are 90.9 million tonnes at 0.66% Nb2O5, 70 g/t Sc, and 2.59% TiO2, with inferred resources of 133.6 million tonnes at 0.48% Nb2O5, 59 g/t Sc, and 2.23% TiO2. Mineral Resources are reported inclusive of Mineral Reserves. Mineral Resources and Mineral Reserves have an effective date of May 15, 2017.
Other Highlights of the Feasibility Study Findings
|Ore Mined (kt)||31,661|
|Waste Mined (kt)||1,484|
|Total Material Mined (kt)||33,145|
|Mining Rate (t/d)||2,762|
|Scandium Grade (g/t)||71.6|
|Contained Nb2O5 (kt)||250|
|Contained TiO2 (kt)||891|
|Contained Sc (kt)||2,266|
|Total Ore Processed (kt)||31,661|
|Processing Rate (kt/y)||1,009|
|Average Recovery, Nb2O5||82.4%|
|Average Recovery TiO2||40.3%|
|Average Recovery Sc||93.1%|
|Recovered Nb2O5 (kt)||214|
|Recovered TiO2 (kt)||359|
|Recovered Sc (t)||2,111|
|Realized Product Prices|
|Total Gross Revenue||$17.9 billion|
The FS assumes that the facility will produce 7,055 tonnes per year of ferroniobium, 103 tonnes of Sc2O3, and 11,445 tonnes of TiO2, all on an annualized basis. The following graphs show estimated annual production by commercial product.
Operations and Financial Profile
The following table summarizes assumptions and estimated results from the FS economic model:
The following shows the cumulative LOM pre-tax free cash flow:
Economic Sensitivity Analysis
The following pre-tax economic sensitivity analyses show potential impacts to NPV and IRR from changes in the pricing of niobium, scandium, and titanium, as well as changes in CAPEX and OPEX.
The Project is planned as a high-grade underground mining operation using a long-hole stoping mining method and paste backfill. The Elk Creek mine is planned to operate with a processing rate of 2,762 tonnes per day, for a total of 31.7 million tonnes of ore processed over 32 years of mine life, producing in that period 143,824 tonnes of payable niobium, 3,237 tonnes of scandium (Sc2O3), and 359,128 tonnes of titanium (TiO2). The process flow sheet below illustrates a high-level summary of how the facility will convert ore to finished product.
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