1. business and industrial
2. business operations
3. management
4. project management

Toowong QLD 4066, Australia
“NI 43-101 F1 Technical Report on the
Feasibility of the Nyngan Scandium Project”
EFFECTIVE DATE: October 10, 2014
ISSUE DATE: October 24, 2014
Document Number: 14013-0000-PS-RPT-001
Prepared for:
EMC Metals Corp., Sparks, Nevada
Compiled by:
Larpro Pty Ltd., Brisbane, Australia
Based on:
Documents and sources listed in Item 27 of this report
Endorsed by
Dr. Nigel Ricketts, MAusIMM CP (Metallurgy)
Qualified Persons:
Mr. Stuart Hutchin, B Sc, Geology, MAusIMM, MAIG
Mr. Max Rangott, B Sc, FAusIMM
Technical Report on the Nyngan Scandium Project
October 2014
REVISION CONTROL
Rev #
Date
Description of Change
Originator
A
10-10-14
First Draft
N. Ricketts
B
17-10-14
Issued for use
N. Ricketts
0
23-10-14
Issued for publication
N. Ricketts
Distribution
Copy No.
Recipient
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 2 of 11
Technical Report on the Nyngan Scandium Project
October 2014
Contents
1
2
Summary ......................................................................................................................... 1
1.1
Cautionary Preliminary Economic Assessment (PEA) Statement ............................ 1
1.2
Introduction-Basis of Technical Report ..................................................................... 1
1.3
PEA Financial Highlights .......................................................................................... 2
1.4
Project Location ........................................................................................................ 3
1.5
Project Description ................................................................................................... 4
1.6
Geology and Mineralization ...................................................................................... 4
1.7
Current Mineral Resources ....................................................................................... 5
1.8
Mining ....................................................................................................................... 5
1.9
Feed Handling .......................................................................................................... 5
1.10
Test work and Process Modelling ............................................................................. 6
1.11
Process Flow Sheet and Technology Selection ....................................................... 6
1.12
Key Project Parameters ............................................................................................ 7
1.13
Capital Cost Estimate ............................................................................................... 7
1.14
Operating Cost Estimate .......................................................................................... 8
1.15
Sensitivities ............................................................................................................... 8
1.16
Report Conclusions and Recommendations ............................................................ 9
1.17
Recommendations – Next Steps ............................................................................ 10
Introduction .................................................................................................................... 11
2.1
3
Terms of Reference and Purpose of Report ........................................................... 11
Reliance on Other Experts ............................................................................................. 13
3.1
Effective Date and Certificates ............................................................................... 16
3.2
Certificate of Qualified Person – Nigel Jeffrie Ricketts, Member & (CP) Metallurgy,
AusIMM ............................................................................................................................. 17
3.3
Certificate of Qualified Person – Stuart Hutchin, B Sc (Applied Geology) Member,
MAusIMM, MAIG ............................................................................................................... 18
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 3 of 11
Technical Report on the Nyngan Scandium Project
October 2014
3.4
4
Certificate of Qualified Person – Maxel Rangott, Fellow, AusIMM ......................... 19
Property Description and Location ................................................................................. 20
4.1
Property Location ................................................................................................... 20
4.2
Mineral Titles .......................................................................................................... 21
5
Accessibility, Climate, Local Resources, Infrastructure and Physiography ................... 23
5.1
Topography, Elevation and Vegetation .................................................................. 23
5.2
Climate and Length of Operating Season .............................................................. 23
5.3
Access to Property ................................................................................................. 23
5.4
Surface Rights ........................................................................................................ 24
5.5
Local Resources and Infrastructure ........................................................................ 24
6
5.5.1
Access Roads and Transportation .................................................................. 24
5.5.2
Power Supply .................................................................................................. 24
5.5.3
Town of Nyngan .............................................................................................. 24
5.5.4
Water Supply ................................................................................................... 25
5.5.5
Port .................................................................................................................. 25
5.5.6
Buildings and Ancillary Facilities ..................................................................... 25
5.5.7
Manpower ........................................................................................................ 25
History............................................................................................................................ 27
6.1
Origins of the Name ‘Gilgai’ .................................................................................... 27
6.2
Past Exploration and Development ........................................................................ 27
7
Geological Setting and Mineralization ........................................................................... 30
8
Deposit Type.................................................................................................................. 31
8.1
9
Mineralization ......................................................................................................... 31
Exploration ..................................................................................................................... 33
9.1
Surveys and Investigations ..................................................................................... 33
9.2
Interpretation of the Exploration Information .......................................................... 33
9.3
Statement ............................................................................................................... 33
10
Drilling ........................................................................................................................ 34
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 4 of 11
Technical Report on the Nyngan Scandium Project
October 2014
10.1
Overview ................................................................................................................. 34
10.2
Drilling Programmes ............................................................................................... 34
10.3
Sample Collection ................................................................................................... 35
10.4
Sample Recovery Methods .................................................................................... 35
10.5
Interpretation .......................................................................................................... 36
10.6
Establishing Higher Grades .................................................................................... 36
10.7
Relevant Samples .................................................................................................. 36
11
Sample verification ..................................................................................................... 38
12
Data Verification ......................................................................................................... 41
12.1
Quality Control Measures and Procedures ............................................................. 41
12.2
Limitations .............................................................................................................. 41
13
Mineral Process and Metallurgical Testing ................................................................ 42
13.1
Proposed Flow Sheet ............................................................................................. 42
13.2
Sample Selection and Delivery ............................................................................... 42
13.3
Acid Bake Test Work .............................................................................................. 43
13.4
Solvent Extraction Test Work ................................................................................. 43
13.5
Scandium Oxide Precipitation Test Work ............................................................... 44
13.6
High Pressure Acid Leach Test Work ..................................................................... 45
13.7
Flotation Test Work ................................................................................................ 46
13.8
Ion exchange Test Work ......................................................................................... 46
13.9
Future Test Work .................................................................................................... 47
14
Mineral Resource Statements .................................................................................... 49
14.1
Resource Calculations ............................................................................................ 49
14.2
Significant Assay Results ....................................................................................... 54
15
Reserve Estimates ..................................................................................................... 55
16
Mining Methods .......................................................................................................... 56
16.1
Geologic Modelling ................................................................................................. 56
16.2
Block Model Design for Pit Optimisation ................................................................ 56
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 5 of 11
Technical Report on the Nyngan Scandium Project
October 2014
16.3
Optimization Parameters ........................................................................................ 57
16.4
Overburden Removal ............................................................................................. 60
16.5
Mining and Hauling to Plant .................................................................................... 60
17
Recovery Methods ..................................................................................................... 61
17.1
Process Description................................................................................................ 61
17.1.1
Feed preparation (Area 1000) ......................................................................... 61
17.1.2
Feed thickening (Area 1700) ........................................................................... 61
17.1.3
High pressure acid leaching (Area 2100) ........................................................ 62
17.1.4
CCD circuit (Area 3000) .................................................................................. 62
17.1.5
Partial neutralization (Area 4000) .................................................................... 62
17.1.6
Solvent extraction (Area 5000) ........................................................................ 63
17.1.7
Scandium oxide recovery (Area 6000) ............................................................ 63
17.1.8
Final neutralization and tailings (Area 7000) ................................................... 63
17.1.9
Water management ......................................................................................... 64
17.1.10
Reagents ..................................................................................................... 64
17.1.11
Services ....................................................................................................... 66
17.2
Process Design Criteria .......................................................................................... 66
17.3
Process Flow Sheet ................................................................................................ 67
17.4
Plant layout ............................................................................................................. 68
17.5
Power Requirement ................................................................................................ 72
18
Project Infrastructure .................................................................................................. 73
18.1
Power Supply and Distribution ............................................................................... 73
18.1.1
Power Source .................................................................................................. 73
18.1.2
Switch room ..................................................................................................... 73
18.2
Control System ....................................................................................................... 74
18.3
Communications ..................................................................................................... 74
18.4
Roads ..................................................................................................................... 74
18.5
Water ...................................................................................................................... 74
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 6 of 11
Technical Report on the Nyngan Scandium Project
October 2014
18.6
Site levee ................................................................................................................ 75
18.7
Dams and Ponds .................................................................................................... 75
18.8
Plant security .......................................................................................................... 75
18.9
Accommodation ...................................................................................................... 76
19
Market Studies and Contracts .................................................................................... 77
19.1
Current Global Market Size .................................................................................... 77
19.2
Scandium Products Defined ................................................................................... 77
19.3
Scandium Market Pricing ........................................................................................ 77
19.4
Market Supply – Scandium Sources ...................................................................... 79
19.5
Scandium Applications ........................................................................................... 81
19.6
Scandium Markets .................................................................................................. 81
19.7
PEA Scandium Pricing Assumptions ...................................................................... 82
20
Environmental Studies, Permitting and Social or Community Impact ........................ 83
20.1
Summary of Results of Environmental Studies ...................................................... 83
20.2
Environmental Management Plans ......................................................................... 83
20.2.1
Waste and Tailings Disposal ........................................................................... 84
20.2.2
Site Monitoring ................................................................................................ 84
20.2.3
Water Management during Operational Life ................................................... 84
20.3
Project Permitting Requirements ............................................................................ 84
20.4
Social and Community Relationships ..................................................................... 85
20.5
Mine Closure Requirements ................................................................................... 85
21
Capital and Operating Costs ...................................................................................... 87
21.1
Introduction ............................................................................................................. 87
21.2
Capital Cost Estimate ............................................................................................. 87
21.2.1
Summary of the Capital Estimate .................................................................... 87
21.2.2
Basis of Estimate – General ............................................................................ 88
21.2.3
Estimating Accuracy ........................................................................................ 88
21.2.4
Base Currency and Estimate Base Date ......................................................... 88
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 7 of 11
Technical Report on the Nyngan Scandium Project
October 2014
21.2.5
Pre Stripping Cost Detail ................................................................................. 88
21.2.6
Initial Pricing and Quantity Development-Plant Cost ....................................... 89
21.2.7
Process Plant Mechanical Equipment ............................................................. 89
21.2.8
Process Plant Discipline Pricing ...................................................................... 90
21.2.9
Freight and Start-up Costs .............................................................................. 92
21.2.10
Craneage ..................................................................................................... 93
21.2.11
Freight Costs ............................................................................................... 93
21.2.12
Vendor Representatives .............................................................................. 93
21.2.13
Spare parts .................................................................................................. 93
21.2.14
First Fills ...................................................................................................... 93
21.2.15
Engineering, Procurement and Construction Management (EPCM) ........... 93
21.2.16
Contingency ................................................................................................. 94
21.2.17
Owner’s Costs and Working Capital ............................................................ 94
21.3
Project Operating Cost ........................................................................................... 95
21.3.1
Operating Cost Summary ................................................................................ 95
21.3.2
Stripping and Mining Cost ............................................................................... 97
21.3.3
Process Plant Operating Costs ....................................................................... 97
22
Economic Analysis ................................................................................................... 102
22.1
Cash Flow Model – Financial Summary ............................................................... 102
22.2
Capital Cost Summary .......................................................................................... 103
22.3
Operating Cost Summary ..................................................................................... 104
22.4
Project Scope................................................................................................... 105
22.5
100% Basis Presentation ..................................................................................... 106
22.6
Basis of Revenue Estimates ........................................................................... 106
22.7
Cost and Product Price Escalation ................................................................. 107
22.8
Currency Exchange Rate Assumptions ......................................................... 107
22.9
Mine Closure and Salvage Costs ................................................................... 107
22.10
Taxes and Royalties ........................................................................................ 107
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 8 of 11
Technical Report on the Nyngan Scandium Project
October 2014
22.11
Sensitivities to Key Variables ............................................................................ 109
23
Adjacent Properties .................................................................................................. 111
24
Other relevant data and information ......................................................................... 112
25
Interpretation and Conclusions ................................................................................ 113
26
Recommendations ................................................................................................... 116
26.1
Next steps ............................................................................................................. 116
26.2
Areas Recommended for Technical Improvements ............................................. 116
27
26.2.1
Batch versus continuous autoclaves ............................................................. 116
26.2.2
Solvent extraction .......................................................................................... 117
26.2.3
Feed preparation ........................................................................................... 117
26.2.4
HPAL Leaching ............................................................................................. 117
26.2.5
Slurry rheology .............................................................................................. 118
26.2.6
Tailings .......................................................................................................... 118
26.2.7
Scandium oxalate precipitation ..................................................................... 118
References ............................................................................................................... 119
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 9 of 11
Technical Report on the Nyngan Scandium Project
October 2014
List of Figures
Figure 4.1 Location of Nyngan Scandium Property .............................................................. 20
Figure 16.1 Pit Shell – Year 10 ............................................................................................ 59
Figure 16.2 Pit Shell – Year 20 ............................................................................................ 59
Figure 17.1 Simplified process flow sheet ........................................................................... 69
Figure 17.2 Proposed plant layout ....................................................................................... 70
Figure 17.3 Preliminary sketch of autoclave layout ............................................................. 71
Figure 21.1 Operating cost summary by area ...................................................................... 96
Figure 21.2 Split of Operating Costs .................................................................................... 98
List of Tables
Table 1.1 Key PEA Financial Results and Parameters .......................................................... 3
Table 1.2 Nyngan Scandium Project NI 43-101 Resources Summary .................................. 5
Table 1.3 Key PEA Operating Parameters ............................................................................ 7
Table 1.4 PEA Capital Cost Summary ................................................................................... 8
Table 1.5 PEA Operating Cost Summary .............................................................................. 9
Table 1.6 NPV/IRR Sensitivities to Assumptions Change ..................................................... 9
Table 2.1 Definition of Terms ............................................................................................... 12
Table 6.1 Select Lachlan Assay Results ........................................................................... 28
Table 6.2 Significant results from Anaconda assay data ..................................................... 29
Table 10.1 Table of Significant Drill Results ......................................................................... 37
Table 11.1 Analysis of Crushed and Blended Head Samples .............................................. 39
Table 14.1 Calculated Densities .......................................................................................... 50
Table 14.2 Resource Grade ................................................................................................. 50
Table 14.3 Density Calculations .......................................................................................... 51
Table 14.4 Nyngan Property – Total Resource Calculation ................................................. 52
Table 14.5 Nyngan Property – All Categories - Resource Calculation Sheet ...................... 53
Table 16.1 Whittle Optimization Parameters ....................................................................... 58
Table 17.1 Summarised Process Design Criteria ................................................................ 67
Table 17.2 Electrical Load - Processing Plant ..................................................................... 72
Table 19.1 USGS Historic Published Pricing for Various Scandium Products..................... 79
Table 21.1 Summary of initial capital costs .......................................................................... 87
Table 21.2 Summary - Mechanical Equipment Capital Cost Detail ..................................... 89
Table 21.3 Summary – Infrastructure Capital Cost .............................................................. 92
Table 21.4 Summary – Freight/Start-up Capital Cost .......................................................... 93
Table 21.5 Summary – Owner’s Capital Cost ...................................................................... 94
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 10 of 11
Technical Report on the Nyngan Scandium Project
October 2014
Table 21.6 Operating Cost Summary .................................................................................. 96
Table 21.7 Summary of Consumables Costs .................................................................... 100
Table 21.8 Maintenance Cost Derivation ........................................................................... 100
Table 22.1 Project Financial Returns Summary ................................................................ 103
Table 22.2 Nyngan Capital Cost Summary ........................................................................ 104
Table 22.3 Key Operating Costs Summary ....................................................................... 105
Table 22.4 Sensitivity to Product Price .............................................................................. 109
Table 22.5 Financial Parameters Sensitivity ...................................................................... 109
Table 22.6 Sensitivity to Operating Parameters ................................................................ 110
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 11 of 11
Technical Report on the Nyngan Scandium Project
October 2014
1 Summary
1.1
Cautionary Preliminary Economic Assessment (PEA) Statement
This PEA is preliminary in nature and should not be considered to
be a pre-feasibility or feasibility study, as the economics and
technical viability of the Project have not been demonstrated at
this time. While this PEA does not consider or include any
Inferred Mineral Resources, and includes only Measured and
Indicated Resources, it remains a preliminary analysis that is not
sufficient to enable Project Resources to be categorized as
Mineral Reserves. Furthermore, there is no certainty that the PEA
will be realized.
1.2
Introduction-Basis of Technical Report
This NI 43-101 Technical Report on the Nyngan Scandium Project in New South Wales,
Australia, has been independently prepared for EMC Metals Corp. (“EMC”), a Canadian
TSX-listed mining company (TSX:EMC.To), headquartered in Sparks, Nevada, USA.
This Technical Report has been independently prepared for EMC as an NI 43-101 F1
compliant Technical Report by Larpro Pty Ltd, of Brisbane, Australia.
This Technical Report represents new engineering and economic disclosures on the Nyngan
Scandium Project, but it does not represent an update or change to the existing measured
and indicated resource (M&I Resource), already established on the Nyngan property in 2010.
This new Technical Report does rely on the existing 2010 resource report, and on other
reports done for EMC management, in particular:
•
NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining
Limited, Nyngan, New South Wales, Australia,, Max Rangott, QP, Rangott Mineral
Exploration Pty Ltd, of Orange, NSW, Australia, Effective Date- February 9, 2010.
•
Nyngan Scandium Project Study, prepared for EMC management by SNC-Lavalin of
Brisbane, Australia, February 2012.
•
Scandium Recovery From Gilgai Laterite Ores by Acid Curing, Baking, Leaching,
Solvent Extraction, and Precipitation, prepared for EMC management by Roberts &
Schaefer Company, of Sandy, Utah, July 2010.
In addition to these historic management reports on the project, and the NI 43-101 Technical
Report on Resources for the property, EMC has commissioned a number of metallurgical
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 1 of 120
Technical Report on the Nyngan Scandium Project
October 2014
test work programs with various independent groups, the results of which were all
considered in this Technical Report.
This Technical Report represents a Preliminary Economic Assessment (“PEA”) on the
overall project economics of the Nyngan Scandium Project, and was designed to a +/-30%
standard of accuracy.
This PEA is the first study to apply a high pressure acid leach (HPAL) circuit to the front end
of the Nyngan Project processing flow sheet. Prior studies were based on higher
temperature, atmospheric systems that EMC referred to as acid-baking techniques. HPAL is
the more common technique for lateritic resource processing, and there is a large body of
experience and knowledge with this process solution, which tends to be more efficient in
minimizing acid and achieving high recoveries, ultimately improving production costs.
The earlier process flow sheets were modified to utilize HPAL by engineers from Larpro.
This included a new mechanical equipment list, new process design parameters and a new
operating and capital cost estimate. The basis for the HPAL design was metallurgical test
work conducted by EMC Metals at SGS Laboratories, combined with test work on solvent
extraction and scandium recovery conducted by Hazen Research and CSIRO.
This NI 43-101 Technical Report has been developed in accordance with internationally
accepted guidelines for such Technical Reports and attempts to accomplish the following
objectives:
•
Define the preliminary economic viability of the Nyngan Scandium Project, and
present a single investment option for consideration,
•
Obtain a reasonable certainty of process, production, revenue, scope, time and cost,
•
Develop a document that will support further study and development decisions by the
Project sponsors, and support further funding for those advanced studies, and
•
1.3
Establish a baseline for both Project execution and operations.
PEA Financial Highlights
A summary of the key financial results from the PEA is presented in Table 1.1 below. NOTE:
all dollar-based figures are expressed in US dollars (US$) unless otherwise noted, and all
tonnes references and abbreviations are intended to be metric tonnes, throughout the
Report.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 2 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 1.1 Key PEA Financial Results and Parameters
Summary
Nyngan Project
Key Project Parameters
NI 43-101
PEA
Result
Capital Cost Estimate (US$ M)
$77.4
Resource Grade Assumption (ppm)
Resource Processed (tpy)
Mill Recovery Assumption (%)
Oxide Production (kg per year)
Scandia Product Grade
371
75,000
84.3%
35,975
97-99.0%
Annual Cash Operating Cost (US$ M)
Unit Cash Cost (US$/kg Oxide)
$22.9
$636
Oxide Price Assumption (US$/kg)
Annual Revenue (US$ millions)
Annual EBITDA (US$ millions)
$2,000
$72.0
$47.7
NPV (10%i) (After Tax)
NPV (8%i) (After Tax)
IRR (%) (After Tax)
$175.6
$217.8
40.6%
Payback (years)
2.5
This PEA is preliminary in nature and should not be
considered to be a pre-feasibility or feasibility study, as
the economics and technical viability of the Project have
not been demonstrated at this time.
1.4
Project Location
The Nyngan project site is located approximately 450 km northwest of Sydney, NSW,
Australia and approximately 20 km due west from the town of Nyngan, a rural town of
approximately 2900 people. The deposit is located 5 km south of Miandetta, off the Barrier
Highway that connects the town of Nyngan to the town of Cobar. The property is situated in
flat countryside and is classified as agricultural land, used predominantly for wheat farming
and livestock grazing.
Mining has historically been and continues to be a feature of the local economy, with the
Tritton copper mine, owned and operated by Straits Resources, located approximately 45
km to the northwest of Nyngan.
The Girilambone copper mine and processing plant
operated in the area for many years before closure.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 3 of 120
Technical Report on the Nyngan Scandium Project
October 2014
1.5
Project Description
The Nyngan Scandium Project is envisioned as a small, surface mining operation,
recovering 75,000 tonnes per year of limonite mineralization at an average strip ratio of
under 3:1 (overburden/resource), yielding a head grade to a processing plant of 371ppm
scandium. The processing plant will size the input material, apply high pressure acid
leaching (HPAL) using sulfuric acid, and then recover the liberated scandium from solution
using solvent extraction (SX), oxalate precipitation and calcination, to generate a finished
scandium oxide product. The output of the plant is established at 35,975 kilograms (kg) per
year, at grades between 97% and 99%, as Sc2O3.
1.6
Geology and Mineralization
The area is dominated by Cainozoic alluvial plains from the Darling River Basin with minor
colluviums and outcrop. The region is situated on the shallow southern margin of the Surat
Basin, known as the Coonamble Embayment.
The Gilgai intrusive complex underlays the Nyngan property, covered by 8 to 50 meters of
alluvial material, is thought to be the source of the scandium, nickel, cobalt and precious
metals in the regolith. The area exhibits varying degrees of laterization.
The Gilgai complex is an Alaskan type ultramafic complex, made up of a range of rock types
including hornblende monazite, hornblendite, pyroxenite, olivine pyroxenite to dunite
peridotites and is believed to be Ordovician age. The intrusives are included within the
“Fifield Platinum Province”. Tertiary laterization of the Gilgai complex has produced the fairly
standard laterite profile outlined below:
•
Hematitic clay
•
Limonitic clay
•
Saprolitic clay
•
Weathered bedrock
•
Fresh bedrock
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 4 of 120
Technical Report on the Nyngan Scandium Project
October 2014
1.7
Current Mineral Resources
An NI 43-101 Technical Report on Resources established a measured and indicated
resource on the Nyngan property in 2010, summarized as follows:
Table 1.2 Nyngan Scandium Project NI 43-101 Resources Summary
Nyngan Project
NI 43-101 Resource Summary
Category
Tonnes
Grade
(ppm Sc)
Cut-Off Sc
(ppm Sc)
Overburden
Ratio
(t/t)
Measured Resource
Indicated Resource
Total Resource
2,718,000
9,294,000
12,012,000
274
258
261
100
100
100
0.81:1
1.40:1
1.10:1
NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining
Limited, Nyngan, New South Wales, Australia, dated March 2010, (Rangott Mineral
Exploration Pty Ltd).
Note: Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
The 20-year Project plan will utilize approximately 1.5 million tonnes of limonite resource
from the total measured and indicated categories, albeit at a grade higher than the average
resource grade shown in Table 1.2 (above) for limonite and saprolite over the entire
resource.
1.8
Mining
Open cut mining will employ a hydraulic excavator to remove overburden and expose the top
of the mineralization. A dozer will be then used to rip the limonite layer to an excavator
manageable size, for excavator digging and short truck haulage to the run-of-mine (ROM)
stockpile area. At the low level of mill feed required, it is proposed to employ campaign
mining, approximately 3 to 4 times annually.
Resource stockpiles will be covered with
tarpaulins to prevent wind and rain contamination, and will be recovered to the ROM pad or
the feed preparation circuit with a front end loader. In-pit roads will be developed as required.
1.9
Feed Handling
Project mineralization consists of scandium-rich laterites, containing both limonite and
saprolite clays. This PEA contemplates using the top layer limonite only in this initial
development program. The materials handling characteristics of the mill feed will require
further evaluation to support detailed engineering design for optimal particle sizing in HPAL
circuits, and for material handling systems. The PEA work adopted designs that are typical
of nickel laterite processing operations.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 5 of 120
Technical Report on the Nyngan Scandium Project
October 2014
1.10 Test work and Process Modelling
The test work for the development of the flow sheet was conducted across a number of
organisations, and over a number of years:
•
High pressure acid leaching test work was conducted at SGS Lakefield on limonite,
saprolite and combinations of the two. SGS also examined leaching of residue from
acid bake leaching work.
•
Hazen Research conducted extensive test work on an acid-bake roasting process
followed by water leaching. While not relevant to this PEA, Hazen did produce
process solutions for subsequent solvent extraction and scandium recovery test
work. This included a continuous solvent extraction pilot plant campaign, and work on
the precipitation of scandium from solution using oxalic acid.
•
CSIRO also conducted test work on the acid bake process. They also conducted
solvent extraction test work on a range of organic extractants, and examined the
oxalate precipitation process.
Extensive use was made of Larpro’s METSIM process software modelling capability.
METSIM was applied as a tool to validate various process variants and options, all based on
actual independent test work results EMC was able to provide from prior studies. The final
METSIM result was a fully convergent model, with various recycle and bleed streams
considered and quantified, and included a mass and energy balance for the process. From
these quantities, a mechanical equipment list compliant with the mass balance was
produced as the basis for capital cost estimation. The model also provided reagent and
consumable quantities that were used as the basis for the operating cost determination.
1.11 Process Flow Sheet and Technology Selection
The process flow sheet is based on high pressure acid leaching of the limonite component of
the mineralization in two batch autoclaves. The flow sheet built around this process was:
•
Feed preparation
•
High pressure acid leaching in autoclaves
•
Pressure reduction via a water splash condenser and flash vessel
•
Counter current decantation of the leach residue
•
Solvent extraction of the leach solution with a primary amine
•
Scandium oxalate precipitation by adding oxalic acid
•
Purification and calcination of the oxalate to produce scandium oxide
•
Tailings neutralization and disposal in a conventional tailings dam
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 6 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Reagent storage and utilities
1.12 Key Project Parameters
A selection of the important financial modelling assumptions and inputs that drive project
economics are shown in Table 1.3, below:
Table 1.3 Key PEA Operating Parameters
Nyngan Project
Key Operating Parameters
and Assumptions
General
Life of Mine (years)
NI 43-101
PEA
Result
Head Grade Assumption (g/t)
371
Price/kg (US$)
Product Grade
CapEx (US$M)
$2,000
97-99.0%
$77.4
Production Assumptions
Process Plant Thruput - tpy
Process Plant Thruput - tpd
Initial Production Year
Sc2O3 Production - Kg/year
Opex/tonne Resource (US$)
Cost/kg Sc2O3 (US$)
Mill Recovery
Mill Availability
75,000
240
2017
35,975
$305
$636
84.3%
85.6%
Cash Modeling Assumptions
CapEx in discount year #
Production in discount year #
WC and Sustaining CapEx
Contingency
Escallation of Costs or Prices
Initial Discount Year
Tax Rate
A$/US$ Exchange Rate Assumed
1
2
yes
20.0%
none
2016
30%
$0.90
20
1.13 Capital Cost Estimate
The capital cost estimate for the Project is US$77.4M. This includes US$11.9M in
contingency. The capital cost estimate is provided at an accuracy of +/- 30% with over 70%
of the mechanical equipment cost provided from budget quotes and the remainder from
database information. A summary of the capital cost estimate is shown in Table 1.4, below:
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 7 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 1.4 PEA Capital Cost Summary
Nyngan Project
Capital Cost Summary
(Both A$ and US$)
NI 43-101 PEA Result
US$ Cost
A$ Cost
(M)
(M)
$1.7
$1.6
Direct Mechanical Costs
Process Plant Mechanicals
Plant infrastructure
Freight and Start-Up Costs
Sub Total Mechanicals
$40.8
$13.1
$2.3
$56.2
$36.7
$11.8
$2.1
$50.6
EPCM (18%-Mechanicals)
Contingency (20%-inc EPCM)
Owners Costs
Working Capital
Total Capital Cost
$10.1
$13.3
$1.4
$3.3
$86.0
$9.1
$11.9
$1.3
$3.0
$77.4
Pre-Stripping Cost
1.14 Operating Cost Estimate
The annual operating cost estimate for the Project is US$636/kg Sc2O3. The operating cost
estimate is provided at an accuracy of +/- 25%, with all reagents and consumables provided
from direct vendor quotes. The largest component of operating costs is reagents, with 55%
of that as sulfuric acid. A summary of annual operating costs is shown in Table 1.5.
1.15 Sensitivities
The project financial returns are most sensitive to the selling price assumptions for scandium
product. The project profitability will be dependent upon a successfully designed and
implemented flow sheet to manage costs, and an effective marketing effort to realize product
prices as assumed in the PEA of US$2,000/kg. This pricing is consistent with marketing
research conducted by EMC, and published information from sources such as the US
Geological Survey.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 8 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 1.5 PEA Operating Cost Summary
Nyngan Project
OpEx Mine/Process Expense
(US$ millions)
Mining Costs
Processing Cost
Labor Cost
Utilities
Reagents
Lab Costs
Consumables
Total Processing Costs
NI 43-101 PEA Result
Annual
Unit Cost Per
US$M Cost
kg Oxide
$1.4
$38.78
$3.9
$0.8
$13.0
$0.2
$1.0
$18.9
$108.13
$21.96
$361.53
$6.95
$27.10
$525.67
Marketing & Insurance
Maintenance Spend
Mobile Equipment Cost
$0.7
$1.3
$0.6
$18.76
$37.02
$15.28
Annual Cash Operating Cost
$22.9
$635.51
Table 1.6 NPV/IRR Sensitivities to Assumptions Change
Sensitivity to
Financial Parameters
NPV (10%)
($US M)
IRR (%)
PEA RESULT
$175.6
40.6%
Operating Cost Sensitivity
Cost Increase (10%)
Cost Decrease (10%)
$163.9
$187.4
38.6%
42.5%
Price Sensitivity
Lower Realized Product Price (10%)
Higher Realized Product Price (10%)
$139.3
$212.0
34.5%
46.6%
Capital Cost Sensitivity
Higher Capital Cost (10%)
Lower Capital Cost (10%)
$169.6
$181.6
37.0%
44.9%
Fx Sensitivity
US$/A$ @ $1.00
$162.6
38.3%
US$/A$ @ $0.80
$188.7
42.8%
1.16 Report Conclusions and Recommendations
This PEA consolidates a significant amount of metallurgical test work and prior study on the
Nyngan Scandium Project. The work examines a conventional process flow sheet utilizing
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 9 of 120
Technical Report on the Nyngan Scandium Project
October 2014
the HPAL leaching process with test work showing expected good metallurgical recoveries
of scandium from the laterite mineralization at the Nyngan Project site. The metallurgical
assumptions are supported by small scale, independent test work that is consistent with
known outcomes in other laterite resources. Combined with the capital cost estimate, the
economic modelling of the Project appears to exhibit good financial outcomes that
encourage more detailed study and engineering work.
This PEA is preliminary in nature and should not be considered to be a
pre-feasibility or feasibility study, as the economics and technical
viability of the Project have not been demonstrated at this time. While
this PEA does not consider or include any Inferred Mineral Resources,
and includes only Measured and Indicated Resources, it remains a
preliminary analysis that is not sufficient to enable Project Resources
to be categorized as Mineral Reserves. Furthermore, there is no
certainty that the PEA will be realized.
The financial outcomes are such that the recommendation is made to proceed to a PreFeasibility Study, once certain key process variants have been confirmed with additional test
work. The project will then require more detailed engineering design, in particular around the
autoclave and pressure vessel choices. This engineering design work with a selected
autoclave manufacturer or autoclave design firm, combined with additional test work on
reactive chemistry and potential enhancements to the HPAL process/technique, will provide
a higher level of confidence in the capital cost and performance of the HPAL circuit. The
remainder of the scandium processing circuit is quite small in volume, conventional in nature,
and provides little capital cost risk.
1.17 Recommendations – Next Steps
A range of technical activities should be considered as valuable in fine-tuning the flow sheet
for the Project, and is recommended, including:
•
Additional confirmatory test work is recommended to examine process variants that
would be likely to reduce capital and operating costs. A comparative study between
batch and continuous autoclave systems should be commissioned. Alternative
reagents and process techniques in the solvent extraction area should be
considered.
•
Additional test work is recommended to develop engineering parameters around the
materials handling properties of the laterite resource as it relates to optimum sizing
for best leach kinetics. Studies on the pumping and settling properties of process
slurries would better define system design and environmental solutions as well.
•
Study and review of process variants that might improve the construction materials
requirements, and treatment of effluent streams by utilizing alternative reagents.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 10 of 120
Technical Report on the Nyngan Scandium Project
October 2014
2 Introduction
This Technical Report is focussed on determining the viability of extracting scandium as
scandium oxide (Sc2O3) from the Nyngan property resource. The Nyngan Scandium Project
is located some 25 km due west from the town of Nyngan in New South Wales,
approximately 500 km northwest of Sydney, Australia. The property is situated 5 km south of
Miandetta, off the Barrier Highway that connects the town of Nyngan to the town of Cobar.
The location is characterized by flat countryside, and is classified as agricultural land, used
mainly for wheat farming and livestock grazing.
2.1
Terms of Reference and Purpose of Report
This Technical Report has been compiled by Larpro Pty Ltd from the sections prepared and
signed off by the three Qualified Persons (QPs - identified below) at the request of EMC
Metals Corp., in order to prepare a Canadian National Instrument NI 43-101 compliant
Preliminary Economic Assessment Technical Report on the Nyngan Scandium Project,
Nyngan, NSW, Australia. The qualified persons are:
•
QP: Dr Nigel Ricketts responsible for report sections: 1,2,3,13,17 to 22, and 24 to 27.
•
QP: Maxel Rangott responsible for report sections: 1, 4 to 12, 14 and 23.
•
QP: Stuart Hutchin responsible for report sections: 1, 15 and 16.
This document provides a Preliminary Economic Assessment on the Nyngan Scandium
Project (also referred to a “Nyngan”), prepared according to NI 43-101 guidelines. Form NI
43-101F1 was used as the format for this report.
The intent of Sections 6 to 9 of this Technical Report is to provide the reader with a
comprehensive review of the historical exploration activities conducted at the Nyngan
Scandium Resource and a current estimate of the resource, based on resource drilling of 78
holes totalling 2,954 meters.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 11 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 2.1 Definition of Terms
Term
Definition
Mineral Resource
A concentration or occurrence of material of intrinsic economic
interest in or on the Earth’s crust in such a form, quantity and quality
that there are reasonable prospects for eventual economic extraction.
The location, quantity, grade, geological characteristics and continuity
of a mineral resource are known, estimated or interpreted from
specific geological evidence and knowledge.
Mineral Resources are sub-divided, in order of increasing geological
confidence, into Inferred, Indicated and Measured categories.
Indicated Mineral Resource
An Indicated Mineral Resource is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence sufficient
to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the economic
viability of the deposit. The estimate is based on detailed and reliable
exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings
and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.
Measured Mineral Resource
A Measured Mineral Resource is that part of a Mineral Resource for
which quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated with
confidence sufficient to allow the appropriate application of technical
and economic parameters, to support production planning and
evaluation of the economic viability of the deposit. The estimate is
based on detailed and reliable exploration and testing information
gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
Mineral Reserve
A Mineral Reserve is the economically mineable part of a Measured
or Indicated Mineral Resource demonstrated by at least a Preliminary
Feasibility Study. This study must include adequate information on
mining, processing, metallurgical, economic and other relevant factors
that demonstrate at the time of reporting, that economic extraction can
be justified. A Mineral Reserve includes diluting materials and
allowances for losses that may occur when the material is mined.
Ore Reserves are sub-divided in order of increasing confidence into
Probable Ore Reserves and Proved Ore Reserves.
Probable Mineral Reserve
The economically mineable part of an Indicated and, in some cases
Measured Mineral Resource demonstrated by at least a Preliminary
Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction can be justified.
Proven Mineral Reserve
The economically mineable part of a Measured Mineral Resource
demonstrated by at least a Preliminary Feasibility Study. This Study
must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that demonstrate,
at the time of reporting, that economic extraction can be justified.
Assay
The chemical analysis of mineral samples to determine the metal
content.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 12 of 120
Technical Report on the Nyngan Scandium Project
October 2014
3 Reliance on Other Experts
The QP authors of this Preliminary Economic Assessment Report have assumed and relied
upon the fact that all of the information and existing technical documents listed in the
References section of this Report are accurate and complete in all material respects. While
all information contributed to this Technical Report has been carefully reviewed, its accuracy
and completeness cannot be guaranteed. The QP authors reserve the right to revise this
Preliminary Economic Assessment Report and conclusions should additional information
become known subsequent to the date of this Report.
A draft copy of this Preliminary Economic Assessment Report has been reviewed for factual
errors by all QPs and the QPs have in certain instances relied on EMC Metals Corp. data
and knowledge of the property in this regard. Refer to sections 3.1 to 3.3 below for the
individual certificates of the qualified persons, Nigel Ricketts, Maxel Rangott and Stuart
Hutchin.
While compiling the information on economic models, metallurgical test work results, mining
grades and parameters, infrastructure requirements and environmental information, the QP
authors relied upon various sources, specifically as follows:

EMC Metals Corp. provided its cash flow model on the Nyngan project to the QPs,
provided guidance concerning corporate tax rates, R&D tax credits, mineral royalties,
and spot/ long-term scandium product pricing information provided by their potential
customers involved in various end uses for scandium.

QP Nigel Ricketts has relied upon publically available information concerning
average A$/US$ foreign exchange rates over recent periods and long-term exhibited
trends, plus consensus financial industry predictions on future exchange rates over
the next 4 years in reviewing financial model parameters.

The mass balance used by Larpro to establish preliminary plant flow sheets was
generated using METSIM simulation software and was subsequently used for
equipment sizing for the process plant. The inputs to this model were based on
recorded parameters observed by Hazen Research, CSIRO and SGS Lakefield
during their bench and pilot scale test work. Recovery information and product purity
were also sourced from this test work. Where test work was lacking, typical industry
parameters from nickel laterite processing experience were used.

QP Nigel Ricketts has relied on the February 2012 SNC-Lavalin Nyngan Scandium
Project Study Report for some of the equipment specification. The Larpro activities
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 13 of 120
Technical Report on the Nyngan Scandium Project
October 2014
were essentially an update to the SNC-Lavalin work replacing an acid-bake front end
process with high pressure acid leaching. The HPAL section was fully developed by
Larpro but some of the components utilized in the downstream scandium recovery
circuit were developed and priced by SNC-Lavalin and only reviewed by Larpro
engineers.

QP Nigel Ricketts has relied on information provided by EMC Metals on water and
power negotiations with regulatory authorities and on negotiations with government
agencies

Cash flow models relied upon mine modeling work conducted by Mining One
regarding average realized grades, operating costs and stripping units and costs.
•
QP Nigel Ricketts has relied on the environmental work and status of the EIS
process for the Project, as undertaken by R.W. Corkery of Orange, NSW, Australia
for EMC Metals Corp. and the lack of discovery of any serious archaeological or
social limitations to property development for mining or mineral processing.
Whilst the resource established by the March 2010 Technical Report has not changed, the
reliance by Maxel Rangott, the QP for the resource definition, remains regarding historical
data for the Nyngan Scandium Project provided by the previous owners of the project,
Jervois Mining Limited. Mr. Rangott has relied on that basic data to support the statements
and opinions presented in this technical report on resources. In the opinion of this QP,
•
The historical data is present in sufficient detail, is credible and verifiable in the field
and is an accurate representation of the scandium resource,
•
The historic documentation available for the Nyngan resource is extensive in most
areas and is of good quality,
•
There are no material gaps in the drilling and assay information for the project,
•
Sufficient information is available to prepare this report, and
•
Any statements in the March 2010 Technical Report related to deficiency of
information are directed at information, which in the opinion of the author/s either has
been lost of the period of inactivity and ownerships transfers, is stored in non-sorted
corporate files cases, or it was gathered by previous workers.
This Preliminary Economic Assessment Report includes technical information, which
requires subsequent calculations to derive subtotals, totals and weighted averages. Such
calculations inherently involve a degree of rounding and consequently can introduce a
margin of error. Where these rounding errors occur, QP Maxel Rangott does not consider
them to be material.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 14 of 120
Technical Report on the Nyngan Scandium Project
October 2014
The author/s and QPs have specifically relied upon the work of others in Sections 2 through
9. The information contained in these sections has been derived in part from:

NSW Government data Systems (Minview and Digs)

http://imagery.maps.nsw.gov.au

http://www.minerals.nsw.gov.autasmap/jsp/Viewer.jsp?cmd=login

Department of Lands, Dubbo Office, contact: Craig Ferguson

http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0

Bogan Shire Council, Nyngan, Contact: Josh Loxley

Manager Engineering Services, Bogan Shire Council, Nyngan, Contact: Keith Dawe

Various Online technical reports from previous license owners
Mr. Rangott, as QP for the resource sections of the Preliminary Economic Assessment
Report and the prior NI 43-101 Technical Report on resources for the Nyngan Scandium
Project, dated March 2010, specifically also relied upon:

The author/s of the original information in the JORC compliant “Report on Gilgai
Scandium Project Air Core Drilling and Resource Calculations EL 6009 Nyngan NSW
for Jervois Mining Limited Volumes 1-3, July 2006”.

The authors of that JORC Resource Report were Anthony Jannink, a consultant for
Douglas McKenna and Partners Pty Ltd and Duncan Pursell of Jervois Mining
Limited.

Final report EL 0076 (1967) Nyngan area by Anaconda Australia Limited

Exploration reports on EL 2965 Nyngan/Miandetta area (1988-1990) by Lachlan
Resources NL and Platinum Search NL

First to Third (and final) Annual Reports EL 5589 Nyngan Area (to 11/7/2002) by
Anaconda (NSW) Pty Ltd

First to Seventh (and final) Annual Exploration Reports El 4756 Cobar Area by
Platsearch NL

Drill interval samples, as prepared and assayed by Australian Laboratory Services
Pty Ltd in Orange, NSW.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 15 of 120
Technical Report on the Nyngan Scandium Project
October 2014
3.1
Effective Date and Certificates
The effective date of publication of this technical report is October 10, 2014.
“ORIGINAL SIGNED AND SEALED BY AUTHOR”
_________________________________________
Nigel Ricketts, MAusIMM CP (Metallurgy)
Technical Director, Altrius Engineering Services, Mt Crosby, Queensland, Australia
“ORIGINAL SIGNED AND SEALED BY AUTHOR”
_________________________________________
Stuart Hutchin, MAusIMM, MAIG
Geology Manager, Mining One Consultants, Melbourne, Victoria, Australia
“ORIGINAL SIGNED AND SEALED BY AUTHOR”
_________________________________________
Maxel Rangott, FAusIMM
Director, Rangott Mineral Exploration, Orange, New South Wales, Australia
Following are signed and dated Certificates of Qualifications of the persons responsible for
the report.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 16 of 120
Technical Report on the Nyngan Scandium Project
October 2014
3.2
Certificate of Qualified Person – Nigel Jeffrie Ricketts, Member & (CP)
Metallurgy, AusIMM
I, Nigel Jeffrie Ricketts, of 453 George Holt Drive, Mt Crosby, QLD, Australia do hereby
certify that:
a)
I am a metallurgist recognised as a Chartered Professional by the Australasian
Institute of Mining and Metallurgy (AusIMM), employed as Technical Director of
Altrius Engineering Services and have been so employed since August 2014. I have
recent and relevant experience with metallurgical test work, process development
and engineering design of process plants designed to process nickel and scandiumbearing laterites during previous employment as Consulting Manager with AMEC
Minproc Pty Ltd.
b)
This certificate applies to the Preliminary Economic Assessment Report, titled “NI
43-101 F1 Technical Report on the Feasibility of the Nyngan Scandium Project”
with a date of October 10, 2014.
c)
I undertook undergraduate studies in Metallurgy from the South Australian Institute
of Technology, graduating in 1985. I also was awarded a PhD from the Department
of Chemical Engineering of Monash University in Melbourne, Australia in 1992. I am
a current member of the Australasian Institute of Mining and Metallurgy (Member
Number 106413) and have been awarded the status of Chartered Professional (CP)
in the field of Metallurgy from the AusIMM. I have read the current definition of a
“Qualified Person” as set out in NI 43-101 and state that by virtue of my education,
membership in professional associations and past relevant work experience, I fulfil
the requirements to be a “Qualified Person” for the purposes of NI 43-101.
d)
I have conducted a site visit to the Nyngan site on September 16, 2014, in
conjunction with issuance of this report.
e)
I am responsible for Sections 2-3, 13, 17-22, and 24-27. I contributed in the areas
covered by these sections in the Summary, Section 1 as well.
f)
I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101.
g)
I have had no prior involvement with the property that is the subject of this
Preliminary Economic Assessment Report
h)
I have read NI 43-101 and Form NI 43-101F1 and all sections of the Technical
Report for which I am responsible and those sections have been prepared in
compliance therewith
i)
As of the date of this certificate, to the best of my knowledge, information and belief,
the sections referenced above contain all scientific and technical information that is
required to be disclosed to make the Preliminary Economic Assessment Report not
misleading.
Effective Date: 10 October 2014
Signed:
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 17 of 120
Technical Report on the Nyngan Scandium Project
October 2014
3.3
Certificate of Qualified Person – Stuart Hutchin, B Sc (Applied Geology)
Member, MAusIMM, MAIG
I, Stuart Hutchin, B Sc, Level 9, 50 Market Street, Melbourne, Victoria, Australia, do hereby
certify that:
a) I am employed as a Geology Manager for Mining One consultants of, Melbourne,
Victoria, Australia, specializing in geological consulting and exploration contracting
for a wide variety of clients, and have been so employed since 2011.
b) This certificate applies to the technical report titled “NI 43-101 F1 Technical Report
on the Feasibility of the Nyngan Scandium Project” (“the Report”), with a date of
October 10, 2014.
c) I graduated with a Bachelor of Science degree in Applied Geology from the
University of South Australia, Australia. I am a current member of the Australasian
Institute of Mining and Metallurgy and Australian Institute of Geoscientists. I have
read the current definition of a “Qualified Person” (“QP”) as set out in NI 43-101, and
state by virtue of my education, membership in professional associations, and past
relevant work experience, which spans over 17 years in the field of geology and
mineral exploration with multiple companies and projects, I fulfill the requirements to
be a QP for the purposes of NI 43-101.
d) I have conducted a personal site visit to the Nyngan project site, on December 15,
2011, but I have not conducted a site visit to the subject property in conjunction with
this Report within the last 6 months.
e) I am responsible for Sections 15 and 16 of this Report. I contributed in the areas
covered by these Sections in the Summary, Section 1, as well.
f) I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101.
g) I have had no prior involvement with the property that is the subject of this Technical
Report.
h) I have read NI 43-101 and Form 43-101F1 and all of the Sections of the Technical
Report for which I am responsible, and those sections have been prepared in
compliance therewith.
i) As of the date of this certificate, to the best of my knowledge, information and belief,
the sections referenced above contain all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
Effective Date: October 10, 2014
Signed:
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 18 of 120
Technical Report on the Nyngan Scandium Project
October 2014
3.4
Certificate of Qualified Person – Maxel Rangott, Fellow, AusIMM
I, Maxel Franz Rangott, B Sc, 3 Barrett Street, Orange, NSW, Australia, do hereby certify
that:
a) I am employed as Director of Rangott Mineral Exploration Pty. Ltd., of Orange, NSW,
Australia, specializing in geological consulting and exploration contracting for a wide
variety of clients, and have been so employed since 1987.
b) This certificate applies to the technical report titled “NI 43-101F1 Technical Report on
the Feasibility of the Nyngan Scandium Project” (“the Report”), with a date of October
10, 2014.
c) I graduated with a Bachelor of Science degree from the University of Sydney, NSW,
Australia. I am a current Member & Fellow of the Australasian Institute of Mining
and Metallurgy, a Member of the Mineral Industry Consultants Association, and a
Member of the Australian Institute of Geoscientists.
I have read the current
definition of a “Qualified Person” (“QP”) as set out in NI 43-101, and state that by
virtue of my education, membership in professional associations, and past relevant
work experience, I fulfill the requirements to be a QP for the purposes of NI 43-101.
d) I have personally visited the Nyngan project site on numerous occasions over the last
10 years, but have not done so in conjunction with the issuance of this Report, within
the last 6 months.
e) I am responsible for Sections 4-12, 14, and 23. I contributed in the areas covered by
these Sections in the Summary, Section 1, as well. I was assisted by Dr. Sanja Van
Huett on these Sections, who was the original Report author of these Sections,
f) I am independent of the issuer, as defined by the test in section 1.5 of NI 43-101.
g) I have had prior involvement with the property that is the subject of this Technical
Report, in that I was the QP on the March 2010 property resource report titled, “NI
43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining
Limited, Nyngan, New South Wales, Australia”. The resources established in that
2010 report are unchanged in this latest NI 43-101 Technical Report, dated October
10, 2014.
h) I have read NI 43-101 and Form 43-101F1 and all of the Sections of the Technical
Report for which I am responsible, and those sections have been prepared in
compliance therewith.
i) As of the date of this certificate, to the best of my knowledge, information and belief,
the sections referenced above contain all scientific and technical information that is
required to be disclosed to make the Technical Report not misleading.
Effective Date: October 10, 2014
Signed:
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 19 of 120
Technical Report on the Nyngan Scandium Project
October 2014
4 Property Description and Location
4.1
Property Location
The Nyngan scandium deposit lies 20 km almost due west of the town of Nyngan,
approximately 450 km northwest of Sydney. By public road the property is 5 km south of
Miandetta, off the Barrier Highway that connects Nyngan to Cobar as shown schematically in
Figure 4.1.
Figure 4.1 Location of Nyngan Scandium Property
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 20 of 120
Technical Report on the Nyngan Scandium Project
October 2014
The drive from the town of Nyngan to the property takes approximately 20 minutes. The area
can be reached via the paved Barrier Highway which allows year round access but access to
the site itself is along clay farm tracks making access in wet conditions difficult. Several of
the Crown roads in the area are in the process of being closed or offered for sale, and one in
particular would make a superior choice to provide access to the property with minimum
impact on local land owners. Discussions on this asset are currently underway.
The resource site is located at geographic coordinates MGA zone 55, GDA 94, Latitude 31.5987, Longitude 146.9827, Map Sheets 1:250k – Cobar (SH/55-14) and 1:100k
Hermidale (8234).
4.2
Mineral Titles
The scandium resource is held under the mineral title – Exploration License (EL) 6009
(Block Number 3132, units d, e, j, k and Block no. 3133, unit f) and EL 6096 (Block 3132,
unit p, and Block 3133, units l, m, r and s). An Assessment Lease Application is currently
pending over the area of these two ELs and over a third area, EL 6095, located 25km to the
south-southwest.
The Exploration Licenses allow the license holder to conduct exploration on private land
(with landowner consents and signed compensation agreements in place) and public lands
not including wildlife reserves, heritage areas or National Parks. The scandium resource is
fully enclosed on private agricultural land.
As of the writing of this report, Jervois Mining Limited (“Jervois”) holds legal title to both the
surface and mineral rights on the Nyngan project. These legal rights and all project rights are
subject to a binding Settlement Agreement between Jervois and EMC, dated February 5,
2013, in which 100% of all rights to the EL’s, freehold land and project rights were
transferred to EMC in return for certain cash payments and royalty rights retained by Jervois.
Final payments were made in June 2014, and transfer documents have been drawn,
executed and lodged with the applicable NSW State agencies for transfer to EMC. The
transfer process is expected to be finalized by the end of 2014.
The local administrative body with property taxation jurisdiction is the Bogan Shire Council,
Nyngan NSW. Annual property rates, subject to annual assessment, are A$828, a payable
to the Bogan Shire Council Offices on or before August 31st each year.
Additionally, the exploration tenement holder is required to submit Interim and Annual
Exploration Progress Report to the Department of Industry and Investment, NSW, outlining
all work done on the tenements in the form of exploration or R&D/mineral test work to
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 21 of 120
Technical Report on the Nyngan Scandium Project
October 2014
advance the property to development. The report must include expenditure details, along
with results of the work, and must meet the minimum annual expenditure established for
each EL. The combined minimum for the two ELs at Nyngan is approximately A$65,000 per
year. For 2014, the Annual Report has been filed for EL 6096 (June) and EL 6009 is being
drafted for submission in October.
The freehold property boundaries are defined by standard land survey techniques
undertaken by the Lands Department and currently presented in the form of Cadastral
Deposited Plans (DP) and Lots. The land associated with the project rights under transfer to
EMC is DP 752879, Lots 6 and 7 (Appendix 2, Lots 6 and 7 - Nyngan).
The combined area of the tenements covering the Nyngan scandium resource is 29.25
square km (of which approximately 14.6 square km is EL 6096 and 14.6 square km is the
southern area of EL 6009.) The main resource area (at cut-off 100ppm Sc) covers
approximately 0.5 square km.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 22 of 120
Technical Report on the Nyngan Scandium Project
October 2014
5 Accessibility, Climate, Local Resources, Infrastructure and
Physiography
5.1
Topography, Elevation and Vegetation
The topography is mildly undulating to flat elevated plateaus at an average elevation of 173
m above sea level. The area is overlain with alluvial red clays which display ‘Gilgai-type’
swelling characteristics.
The area is predominantly dry eucalypt and native pine woodland. Large areas of original
woodlands have been permanently altered through the removal of pine for timber, the
grazing of shrubs by livestock and the invasion of woody weeds.
5.2
Climate and Length of Operating Season
The Nyngan area climate is generally described as sub-arid. The highest mean summer
temperatures of 34°C usually occur in January. Winter mean minimum temperatures of 16°C
typically are recorded in July. In summer, temperatures can reach 40°C, while winter low
temperatures can occasionally reach 0°C during night time. These extremes are relatively
rare, and would pose no limitations for mining or processing operations.
The mean maximum (summer) rainfall of 51 mm occurs in January and the mean (winter)
rainfall minimum of 27 mm in September. Nyngan is generally under a sub-tropical to tropical
influence from the north of the continent. The operating season for a mining operation can
be all year round, provided all-weather gravel roads with appropriate drainage are
constructed for access.
5.3
Access to Property
The town of Nyngan (NSW) lies on the Mitchell Highway, northwest of Dubbo, which is the
largest regional community in proximity. To reach EMC’s Nyngan property from the town of
Nyngan, the most direct route is via the Barrier Highway, which intersects the Mitchell
Highway at the western end of the town of Nyngan. The community of Miandetta lies
approximately 25 km from Nyngan, along the Barrier Highway. At Miandetta, the highway
intersects Gilgai Road. The EMC property is approximately 5 km south west on the Gilgai
Road (paved), accessible through private roads and Crown roads, which are all weather
roads but not paved. The property is not visible from the Gilgai Road.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 23 of 120
Technical Report on the Nyngan Scandium Project
October 2014
5.4
Surface Rights
EMC has purchased approximately 800 acres of land (freehold) which encompasses most of
the scandium resource on the property. The surface rights are managed by Hetherington
Exploitation and Mining Title Services Pty. Ltd., Sydney, NSW on behalf of EMC. At time of
this Report EMC is in process of formal legal transfer on the freehold rights from the former
owner Jervois, as per the 2013 Settlement Agreement (obligations completed and land
transfer initiated in June 2014).
5.5
5.5.1
Local Resources and Infrastructure
Access Roads and Transportation
The township of Nyngan is accessed by the Barrier and Mitchell Highways, both paved allweather inter-State two lane highways. There is a single track rail line used for hauling grain
and sulfide concentrates from mines at Cobar that runs through Nyngan to the eastern
seaboard ports. A branch of this rail line runs past the Nyngan property, approximately 5 km
from the resource area.
5.5.2
Power Supply
The closest major electricity substation is located in the regional city of Dubbo, NSW,
approximately 170 km from the Nyngan property. A high voltage power line (132 kV) runs
parallel to the Barrier Highway from Nyngan to Cobar, and passes within 3 km of the
resource area. Domestic power lines also run along the Gilgai Road.
The largest solar farm in Australia is currently under construction and nearing completion in
the area as well. The owner and operator, AGL (ASX Ticker:AGK) is finalizing construction
of a 102 MW fixed (non-tracking) solar photovoltaic installation directly adjacent to the
Barrier Highway approximately 10 km from Nyngan and 20 km from the Nyngan property.
The installation will generate 360,000 MWh of electric power per year, and include a
transformer station to tie directly into the existing 132 kV Nyngan-Cobar high voltage
transmission line. The facility is scheduled to begin producing electricity for the NSW
electrical grid in June 2015.
5.5.3
Town of Nyngan
The town of Nyngan has a population estimate of 2,900, and has a regional hospital, primary
through tertiary school systems and several restaurants and hotels, although rooms are not
plentiful. The town hosts the local governmental offices of the Bogan Shire, and caters to the
road traffic travelling between Cobar and Dubbo. It is estimated that approximately one third
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 24 of 120
Technical Report on the Nyngan Scandium Project
October 2014
of the population either works or services mining projects in the area. The primary regional
industry is agriculture, with wheat the predominant crop.
The AGL solar construction project has brought over 300 local jobs to the community, and
required the company to construct a mess/accommodation facility to support the project
during construction and commissioning.
Travel times by car from the town of Nyngan to both Dubbo and Cobar are each about 1.5
hours. Dubbo’s population is about 40,000, is considered the crossroads of NSW, and
supports a regional population of over 130,000. Cobar is slightly larger than Nyngan (pop.
estimate 3,700) and is both an historic and current mining community with zinc and copper
mining that began in the 1880s.
5.5.4
Water Supply
The project requires almost 200 mega-liters (ML) of water per annum. This water can be
sourced from two possible areas;
1.
Underground water from the Lachlan Fold Belt or,
2.
From an existing storage reservoir (Burrendong Dam on the Macquarie River).
EMC plans to apply for an allocation from this storage. Water is released and flows to the
township of Nyngan via the Macquarie River, an irrigation channel and finally into the Bogan
River near Nyngan. A pumping station then pumps the water via two existing parallel
pipelines which supply Cobar some 120 km away. These pipelines follow the Barrier
Highway and are within 5 km of the Nyngan Project. A modest off-take would be required to
provide water to the project.
5.5.5
Port
The nearest port facility is at Newcastle, NSW, located approximately 500 km from the
property via the paved State highway system, capable of transporting heavy equipment to
site, and supporting continuous all-weather transport of process inputs for the project.
5.5.6
Buildings and Ancillary Facilities
There are currently no buildings or ancillary facilities on the site.
5.5.7
Manpower
Adequate skilled labor for technical and hourly staff is available in Nyngan, Cobar and other
regional communities. The Nyngan community has the room and infrastructure in place to
expand to meet the demands of growing local business, although at present there is not a
ready supply of housing available for rent or purchase. The major solar project under
construction will involve as many as 300 construction staff, and the constructor is presently
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 25 of 120
Technical Report on the Nyngan Scandium Project
October 2014
planning to set up mess/accommodation facilities in the town to house and feed staff. A
mining project such as EMC is contemplating would likely require a similar solution, on a
much smaller scale during construction, and the solar project facility may represent a timing
opportunity for EMC to use established facilities after completion of that project.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 26 of 120
Technical Report on the Nyngan Scandium Project
October 2014
6 History
6.1
Origins of the Name ‘Gilgai’
The Nyngan scandium property had been commonly also known as the Gilgai scandium
property, as it was referred to during numerous drilling phases and owners through the
1970’s, 1980’s and 1990’s. The word is Aboriginal in origin, and means ‘small water hole’.
Gilgais form where heavily clayed soils swell and crack, creating shallow depressions that
capture and retain water in small pools. Gilgais are further encouraged by areas with
pronounced wet and dry seasons, and were important water sources for native Australians,
range animals, and early pastoral farmers and grazers.
The naming of the prospect, according to M. Rangott, came from the Parish of Gilgai,
County of Flinders, as the prospect lies within that Parish. The name was later applied by
geologists and exploration groups to one of the significant local buried geologic formations,
known as the Gilgai Complex, an Alaskan-type intrusive that is host to nickel, cobalt,
platinum and scandium.
EMC refers to the property as either the Nyngan scandium property or the Nyngan
Scandium Project, reserving the Gilgai name as a title for the broad geologic formation
associated with the property and the scandium resource.
6.2
Past Exploration and Development
The first systematic exploration in the region was by Selection Trust in the late 1970’s,
targeting base metal and gold mineralization. Work included mapping, rock chip sampling
and the drilling of seven percussion drill holes. The results returned were not deemed
encouraging by Selection Trust, however values of up to 1.16% nickel were reported.
North Broken Hill Ltd. took up a number of tenements in the late 1970’s and early 1980’s
initially to look for tin, but later for ultramafic sulfide mineralization. To the south of the
Nyngan property, in the Honeybugle area, they conducted regional exploration including the
drilling of 52 auger holes (287m) on Pangee Road and at the Pangee Road Pits.
Lachlan Resources N.L., as manager of the "Platsearch Group" explored for PGE
mineralization in the late 1980's, relinquishing the ground in 1993. Airborne and ground
magnetic surveys were used to locate and delineate the intrusive “Alaskan-style” ultramafic
complexes considered to be prospective for PGE mineralization, modelled initially on the
platinum bearing Tout (Syerston) intrusive complex near Fifield, then on the Kars Complex
near Condobolin. Broad-spaced rotary air-blast (RAB) drilling identified a platiniferous zone
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 27 of 120
Technical Report on the Nyngan Scandium Project
October 2014
at the western end of the large Gilgai complex. A follow-up program included detailed ground
magnetic surveys and RAB drilling at 25m x 50m spacing over an area of 400m x 500m. A
total of 134 RAB holes for a cumulative 6,779m were drilled. Two inclined diamond holes
were also completed, each 250m deep. Assay results from the diamond drilling program
showed peak values of 1.53 g/t Pt, and revealed an iron-rich phase with abundant magnetite
and minor sulfides including pyrite, pyrrhotite, and chalcopyrite. Neutron Activation Scans for
Jervois Mining by Becquerel on five samples of DDH1 core included three samples from the
iron-rich phase. These samples assayed 108, 104 and 110 g/t scandium as shown in Table
6.1.
Table 6.1 Select Lachlan Assay Results
Select Sample Assays From Lachlan RAB Drill Program
Sample Number
Depth (m)
Pt (ppm) Sc (ppm)
Rock Type
27132
109-110
0.34
55.1
Dunite/Olivine Pyroxenite (minor veins)
27142
119-120
1.09
65.4
Olivine Pyroxenite (minor veins)
27229
296-207
<0.05
108
Magnetite Pyroxenite (pegmatite veins)
27262
Magnetite Pyroxenite (pegmatite veins)
239-240
0.11
104
27264
241-242
0.06
110
Magnetite Pyroxenite (pegmatite veins)
Anaconda Minerals acquired exploration title to the area in 1999, and concentrated on
searching for nickel/cobalt enrichment in laterites overlying serpentinite. Anaconda
completed some 31 km of ground magnetic traversing and drilled 54 reverse circulation (RC)
holes, totalling 2,302 meters. Further work was planned by Anaconda but was not carried
out, and the property was relinquished in 2001. Significant results are itemized in Table 6.2.
Jervois Mining Limited was conducting exploration in the general area at about the same
time as Anaconda, and obtained the sample pulps form Anaconda’s RC drill program in
2003, after Anaconda relinquished the exploration area. Jervois further analyzed the drill
samples for other minerals, including scandium. These initial assay results confirmed
significant scandium enrichment in the Gilgai laterites.
During 2006, Jervois completed an RC program on the property, drilling 64 holes for a total
of 2,638 meters. This drilling result allowed a resource to be generated, compliant with both
NI 43-101 and the JORC Code, which was completed by Douglas McKenna and Partners
during 2010.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 28 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 6.2 Significant results from Anaconda assay data
Select Anaconda Drill Hole Results in Area of Nyngan Property
GDA E
GDA N
(m)
(m)
From
(m)
To
(m)
Intercept
(m)
Ni%
Co%
Mg%
WLRC 002
503213
6516003
11
24
13
0.95
0.03
14.4
WLRC 006
503163
6515988
13
21
7
0.72
0.041
7.13
WLRC 007
WLRC 009
504813
505013
6513538
6513588
30
38
43
40
13
2
0.71
0.55
0.044
0.028
7.56
5.12
WLRC 012
504713
6513523
30
48
18
0.56
0.02
7.66
WLRC 013
504613
6513508
36
55
19
1.12
0.097
3.71
WLRC 014
504513
6513473
35
44
9
0.7
0.035
11.5
WLRC 015
504413
6513448
37
53
16
0.98
0.066
7.22
WLRC 017
505713
6512183
22
32
10
0.51
0.03
5.48
WLRC 030
503713
6515183
16
27
11
0.9
0.102
6.03
WLRC 034
504313
6514383
38
52
14
0.73
0.034
5.84
WLRC 035
504213
6514383
37
50
13
0.64
0.027
9.7
DILRC001
499686
6502770
25
27
2
0.17
0.136
1.4
DILRC002
499680
6502679
27
53
26
0.3
0.074
2.1
DILRC003
499660
6502579
15
24
9
0.12
0.145
6
DILRC006
499608
6502272
36
39
3
0.25
0.107
4.2
DILRC012
499723
6502981
52
63
11
0.14
0.095
1.4
Hole ID
In February 2010, EMC Metals entered into a joint venture earn-in agreement with Jervois to
deliver a feasibility study on the Nyngan Scandium Project, within two years. At the two year
anniversary (February 2012) a dispute developed between the parties which ultimately
concluded in a private and binding settlement in early 2013. The terms of the settlement
required EMC to pay Jervois a cash sum over an 18 month period through June 2014, in
return for the transfer of 100% of the Nyngan Scandium Project, including the land and
mineral license rights, to EMC Metals. EMC was also required, as part of the settlement, to
pay Jervois an NSR royalty of 1.7% on scandium produced during the first 12 years of
production, and to accept assignment of an existing NSR royalty (technically a net profits
interest) on the property that Jervois had signed to obtain the property years earlier.
As of the writing of this report (October 2014), all payments due on the settlement
agreement between the parties have been made, and formal transfer of exploration
tenements and freehold land rights associated with the Nyngan scandium property is
underway and progressing with the State of NSW.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 29 of 120
Technical Report on the Nyngan Scandium Project
October 2014
7 Geological Setting and Mineralization
The area is dominated by Cainozoic alluvial plains derived from the Darling River Basin with
minor colluvium and outcrop. The region is situated on the shallow southern margin of the
Surat Basin, known as the Coonamble Embayment. There is evidence of varying degrees of
laterization in the area.
The western-most north-south structural zone of the Lachlan Fold Belt is known as the
Girilambone Structural Zone. It is composed of Cambrian-Ordovician metasediments and
minor basic volcanics known as the Girilambone Group, intruded by numerous mafic and
ultramafic bodies of similar age and by middle Silurian granite and volcanics.
The northern part of the project area covers the south-west limb of a north-south trending
arcuate belt of serpentinised ultramafics known as the West Lynn Serpentinite and a small
block of ultramafics to the south-west called the Miandetta intrusion. Thin section analysis
has interpreted the West Lynn Serpentinite as being derived from the alteration of a medium
grained dunite. The linear nature of the West Lynn ultramafic unit suggests an Alpine-type
origin, supported by the low levels of PGEs determined by assays. The Miandetta intrusion
may be a dismembered portion of the West Lynn Serpentinite.
In the south, the Gilgai and Honeybugle intrusive complexes are Alaskan-type complexes
made up of a range from hornblende monzonite, hornblendite, pyroxenite and olivine
pyroxenite to dunite-peridotites. The intrusives are included within the ‘Fifield Platinum
Province’. The Gilgai complex is covered by 8 to 50 meters of Tertiary to Recent age alluvial
material, with alluvium detected to 85m depth near the northern margin of the complex.
Scandium levels appear to be highest in the pyroxenite and olivine pyroxenite phases of the
complexes, so these rock styles are the main bedrock sources for the scandium
mineralization in the laterites. The highest scandium grades occur in the limonitic laterite
units, overlaying or close to the pyroxenite source rocks.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 30 of 120
Technical Report on the Nyngan Scandium Project
October 2014
8 Deposit Type
The Nyngan scandium resource is located within a limonitic and saprolitic Tertiary laterite,
with a fairly typical laterite profile developed at the prospect:
•
Haematitic clay,
•
Limonitic clay,
•
Saprolitic clay,
•
Weathered bedrock,
•
Fresh bedrock.
The resource is centered over the more mafic phases of the zoned Gilgai ultramafic complex.
Weathering persists to 60m depth in the northern flanks of the complex.
8.1
Mineralization
A geological interpretation plan was prepared, based on bedrock intersections in both recent
and previous drilling. Because of the weathered nature of the drill cuttings, the geological
plan must be considered interpretive. The igneous rock types which have been encountered
are;
•
Pyroxenite,
•
Olivine Pyroxenite,
•
Hornblende Pyroxenite,
•
Hornblendite,
•
Magnetite Pyroxenite,
•
Dunite and
•
Monzonite.
There is a suggestion of a layered trend of the complex in a NW-SE direction (this is
supported by the magnetic pattern). These trends reflect a broadly concentric zonation of
lithologies (mafic lithologies in the centre becoming intermediate in moving out from the
“core”) in the complex. There also appears to be a zone of stronger alteration in the (south)
centre of the zone where abundant magnetite and mica (phlogopite) occur. Jervois assisted
an Australian National University (CRC-LEME) student, Augustine Alorbi, with his Honours
thesis titled ‘The Geology and Geochemistry of the Miandetta Area near Nyngan, NSW’
dated June 2006.
An abstract of Mr. Alorbi’s work states;
“This study focuses on understanding the Geology and Geochemistry of the
Miandetta area, near Nyngan New South Wales. The regolith of the Miandetta
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 31 of 120
Technical Report on the Nyngan Scandium Project
October 2014
region is extensive, deep and complex and by understanding the nature and
origin of this material it is possible to establish whether contained elements are
laterally transported or indicating underlying mineralization.
Drill samples were assessed to understand the degree of geochemical dispersion
of elements related to the underlying mineralization through the in situ and
transported cover. In order to achieve this, the cover was logged and mapped so
as to determine the physical nature of the surficial and buried regolith. This
involved logging eleven holes in detail and interpreting over nine holes that had
been previously logged by Dr K.G. McQueen. Having established the physical
nature of the regolith cover through the bedrock mapping and drill holes
information combined with the regolith-landform mapping, construction of a
schematic cross section of the Miandetta area helped to interpret the geological
history and landscape evolution of the area. Different components of the cover
were analysed by geochemical and mineralogical means (ICP-OES and XRD).
Results from the different methods of analysis all highlighted the variation in
cover type. XRD results showed a decrease in quartz content between the sandy
and clayey units and the geochemistry showed differences in element
abundances suggesting that the different cover types have different provenances.
The geochemical study also indicated that there was some dispersion of
elements related to mineralization vertically up the profile. The sequential
extraction shows that most of the target and pathfinder elements of interest in the
Miandetta terrain are in the strongly bound state and biogeochemistry suggested
that the plants were taking significant amounts of metal from the ground”.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 32 of 120
Technical Report on the Nyngan Scandium Project
October 2014
9 Exploration
9.1
Surveys and Investigations
Previous drilling on the Nyngan property searching for platinum, outlined in Section 4.2,
revealed a large buried laterite body over 1000 x 500 meters in area. The laterite at the
Nyngan resource, which is covered by a minimum of 15 meters of Quaternary alluvials, had
been outlined in the late 1980s by previous explorers searching for platinum. 134 RAB holes
(totalling 6779m) and two diamond drill holes (each 250m deep) were drilled on the prospect.
Between 1999 and 2001, two traverses of RC drill holes were drilled by Anaconda Minerals,
specifically exploring for nickel on the Nyngan property. Jervois made the initial discovery of
the presence of scandium from the assay results of five multi-element Neutron Activation
Scans, taken from the diamond core samples. Jervois subsequently obtained sample pulps
from the RC holes and had those analyzed for scandium. The re-analysis of results of those
RC holes indicated that there was significant enrichment of scandium on the Nyngan
property.
In September 2005, as part of a regional air core drilling programme, Jervois drilled 5 holes
(Na49 to Na53 inclusive) along an east-west fence line through the centre of the laterite
body. Results from this drilling confirmed that a major resource of scandium was present at
Nyngan.
These 5 new RC holes were geologically logged (1 meter intervals), weighed and magnetic
susceptibility readings taken. Chip tray samples were prepared for each drill hole. All
intervals below the alluvial overburden were sampled and dispatched for assay (except for
two holes Na55 and Na89 which penetrated monzonite and sediments respectively). All
sample residue, except alluvium, was transported to a secure, locked shed in Nyngan and
stored for use in future metallurgical test work.
9.2
Interpretation of the Exploration Information
Table 10.1 shows all the significant scandium assay values by section and includes other
previous holes that contribute to the resource figures. The drill intercepts include all
lithologies and where the width is shown in brackets it indicates that there is internal waste
(i.e. contains intervals with less than 100 ppm Sc) within the intercept.
9.3
Statement
Surveys and investigations carried out during 2006 and subsequently have been carried out
by Jervois Mining Limited.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 33 of 120
Technical Report on the Nyngan Scandium Project
October 2014
10 Drilling
10.1 Overview
While the Nyngan property has been drilled by numerous prior owners since the early 1980s,
the target was never for scandium, and consequently none of the early holes were assayed
for scandium. Jervois Mining initiated the scandium interest at Nyngan by re-assaying old
Anaconda pulps in 2003, which served to identify the presence of scandium on the property.
Resource tonnages were subsequently established based on drill work commissioned by
Jervois Mining in 2006 (69 holes). A second program in 2008 (9 holes) was not included in
any revised resource work, serving only to provide material for test work.
10.2 Drilling Programmes
The primarily 2006 air core drilling program was performed by Competitive Drilling Services
Pty. Ltd. of Blayney NSW. The rig used was a Schramm 450, hole diameter 3½ inches
(89mm) and the compressor had a capacity of 350psi and 600cfm. Drilling commenced on
16th January 2006 and was completed on 9th February 2006 with a break of 6 days
between 20th January and 27th January due to compressor breakdown. The program
entailed 2,638 meters in 69 holes in 19 days of drilling (ie a drill rate of 3.6 holes and 139
meters per day). Most of the delays encountered were caused by blockages in the
head/take-off tube especially in gravel overburden. Except for occasional hard hematite
(hole Na85 was abandoned due to hard hematitic ground), the laterite zone generally
allowed good drilling and recovery. A hammer bit (4¾” = 121mm diameter) was used in one
hole (Na100) due to hard ground.
After the completion of each hole, the hole was capped with a blast hole plug about 1 meter
down from the collar and backfilled. The hole’s position was surveyed using a Garmin
GPS12 XL instrument and a marker pin with drill hole number was placed in the collar
location. At the end of the drilling program, on 16th and 17th February 2006, Consulting
Surveyors, Langford and Rowe of Dubbo completed a controlled survey of the drill hole
collars using a Leica Differential (RTK and static) system.
A subsequent 9-hole program was completed in 2008, in order to obtain sample material for
research and development. The assay results from this second program were not
subsequently included in any resource estimates, although the assay results were consistent
with the resource defined by the earlier (2006) program.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 34 of 120
Technical Report on the Nyngan Scandium Project
October 2014
All air core drilling was vertical – the lithotype intersection lengths are close to true
‘stratigraphic’ widths.
10.3 Sample Collection
Drill hole samples were collected through a cyclone mounted to the drilling rig, and captured
in large plastic bags. All of the 1 meter intervals were geologically logged by sieving material
from the bags. The bags were individually weighed, and magnetic susceptibility readings
taken on the bulk bags. Reference chip samples were taken for each drill hole. Samples of
1-2 kg were collected for analysis from each (large, one meter) bulk bag using a metal scoop
by hand, into smaller plastic bags. The air was expelled from the bags, the tops folded down
several times, and sealed with heavy-duty staples. All intervals below the alluvial overburden
were sampled and dispatched for assay, except for two holes NA55 and NA89. These holes
penetrated monzonite and sediments respectively. In hole NA55, a bedrock sample was
collected every 4 meters, and no samples were collected from NA89.
The small plastic sample bags were packed into labelled larger plastic bags and transported
to the Company’s shed in Nyngan at the end of each day, and locked inside until the end of
the drilling program. Shortly after the end of the program, all of the smaller sample bags
were loaded on to pallets, shrink-wrapped and sent to the Australian Laboratory Services Pty.
Ltd.’s (‘ALS’) facility in Orange by commercial road transport, a distance of 315km by road.
Approximately a week after the completion of the drilling program, concurrently with
rehabilitation of the drill sites, all of the bulk samples, except those of alluvium or
metasediments, were transported to a locked shed owned by Jervois, for long-term secure
storage.
At a later date, Jervois personnel retrieved a limited number of the stored one meter bulk
samples, and using a riffle splitter, split off new samples for analysis, to check against those
samples collected by scoop. The scandium assay values for the split samples corresponded
closely to those of the scooped samples sent earlier for assay to ALS in Orange.
Those bulk samples have been retrieved by EMC Metals and are now in a secure storage
facility managed and controlled by Rangott Mineral Exploration Pty Ltd, in Orange, NSW.
10.4 Sample Recovery Methods
Some sample recovery risk is inherent in all air drilling techniques, but the combination of
available reverse-circulation drill tools, high air flows and a competent drill operator, resulted
in acceptable recoveries. The weights of the bulk samples were generally in the range 11-15
kg, with occasional much lower and higher weights.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 35 of 120
Technical Report on the Nyngan Scandium Project
October 2014
In damp or wet stratigraphy (particularly the leached saprolite), sample weights often
dropped below 10 kg, possibly due to returns sticking to the internal walls of the rod string
and the pipe work leading to the cyclone, to the walls of the cyclone, or possibly in the drill
hole behind the bit. The main effect of this was likely some ‘smearing’ (contamination) of
assay values across subsequent sample intervals. However, it is considered that this is
unlikely to have had a material effect on the overall grade of each lithology in the resource
model.
10.5 Interpretation
Table 10.1 shows all the significant assay results for scandium by Section and includes
some earlier holes that contribute to the resource figures. Results do not include any assays
from the 2008 program.
The drill intercepts include all lithologies and where the width is shown in brackets it
indicates that there is internal waste (i.e. contains intervals with less than 100 ppm Sc) within
the intercept.
10.6 Establishing Higher Grades
The laterite in which the resource is located has the higher scandium grades within the
limonite and saprolite intervals. These intervals vary in thickness laterally and the grade also
varies. Ground water and below surface topography are suggested as significant in
determining the grade of scandium. All resource calculations are stated with a 100ppm lower
cut off.
10.7 Relevant Samples
Refer to the table of significant intervals (Table 10.1). All widths are considered true as the
holes were drilled vertically.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 36 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 10.1 Table of Significant Drill Results
Nyngan Scandium Property - Resource Dill Results (68 hole Results)
Hole
From To Width Sc Grade Section
Hole
From
Number
m
m
m
ppm
CDA
Number
m
NA-52A
22
30
8
348
499200E
NA-101
16
NA-54
19
45
26
184
NA-100
14
NA-99
13
NA-72
17
21
4
179
499300E
NA-98
14
15
NA-64
31
16
350
NA-97
15
NA-63
15
53
38
248
NA-56
24
49
-14
174
NA-67
15
NA-68
14
NA-114
18
25
7
268
499350E
NA-96C
16
NA-115
14
24
10
346
NA-69
14
NA-116
14
23
9
242
NA-49
16
NA-121
14
28
14
412
NA-66
13
NA-120
14
40
26
366
NA-60
15
NA-113
15
17
2
235
499400E GILRC003
15
NA-71
12
33
21
257
NA-51
12
24
12
495
NA-83
14
NA-118
14
33
19
401
GILRC002
14
NA-119
13
40
27
267
GILRC001
11
NA-62
13
50
37
279
GILRC013
14
NA-57
49
65
16
240
GILRC012
34
NA-77
20
NA-112
17
29
12
168
499450E
NA-111
16
29
13
287
NA-82
15
NA-110
14
40
26
299
NA-81
13
NA-109
14
35
21
186
NA-80
31
NA-108
14
27
13
257
NA-79
22
NA-107
14
28
14
274
NA-78
18
NA-106
16
24
8
169
NA-117
15
36
21
342
NA-84
14
NA-85
17
NA-103
18
26
8
294
499500E
NA-86
28
NA-75
14
35
21
251
NA-87
41
NA-104
13
40
27
268
NA-74
13
40
27
277
NA-93
20
NA-105
15
35
20
173
NA-92
24
NA-70
16
35
19
357
NA-91
44
NA-50
18
30
12
261
NA-65
16
39
23
316
NA-95
26
NA-61
16
34
18
259
NA-58
31
51
20
246
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
To
m
40
32
34
40
31
Width Sc Grade Section
m
ppm
CDA
24
260
499550E
18
248
21
219
26
236
16
235
28
41
40
34
42
40
53
25
13
27
24
20
26
27
38
10
252
183
193
182
242
389
262
385
499600E
19
55
22
48
61
47
5
-30
11
-28
27
27
211
197
176
330
383
248
499700E
20
42
62
53
46
5
29
31
-27
-16
227
177
359
285
194
499800E
28
20
53
58
14
3
25
17
290
201
410
191
499900E
30
32
60
10
8
16
212
147
202
500000E
42
16
126
500100E
499650E
Page 37 of 120
Technical Report on the Nyngan Scandium Project
October 2014
11 Sample verification
To the best of the knowledge of Maxel Rangott, the Qualified Person, the samples delivered
to Hazen Research and other testing facilities were bulk samples taken from the original
sample bags which contained drill cuttings for each meter from the drilling program. Some
samples were entirely limonite others were entirely saprolite and some were a combination
of the two hosting clays. Prior to dispatch of the samples to Hazen Research the bags were
stored in a locked, secure building in Nyngan.
Hazen Research received two shipments of laterite material from EMC Metals in 2010. The
first was a set of five small samples, three limonite and two saprolite samples, weighing from
1.4 to 8.6 kg each, which were used in the laboratory scale program. The second shipment
included 741 kg of limonite and 371 kg of saprolite for pilot scale test work.
The limonite and saprolite samples were separately dried and homogenized. Prior to
crushing, 51 kg of limonite and 29 kg of saprolite were pulled and saved as library samples.
Each sample type was then stage crushed to 100% passing 50 mesh (297 micron) and reblended. A 10 kg split of each crushed mineralisation type was pulled as a library sample for
further analysis work if needed.
Representative head samples from each lithology were analyzed by inductively coupled
plasma–optical emission spectrometry (ICP-OES). Table 11.1 lists the analytical results. The
limonite sample contained 0.0347 wt% Sc (347 ppm), and the saprolite sample contained
0.0258 wt% Sc (258 ppm).
The first five samples were individually homogenized. Representative splits of each of the
five samples were removed for analysis and testing. Chemical analysis included semiquantitative x-ray fluorescence (XRF) scan performed at Hazen Research. This is a useful
tool for quickly screening multiple samples for the presence of elements (including scandium)
and trends in samples, although the results are not quantitative. This was followed by
quantitative analyses for four constituents of interest; scandium, cerium, lanthanum and
phosphorus.
Quantitative analysis of the five samples was performed by an outside laboratory (Huffman
Laboratories, Inc) as a quality control measure, as well as within Hazen Research. The
Huffman analysis included a four acid digestion followed by inductively coupled plasma
atomic
emission
spectroscopy
(ICP-AES)
and
inductively
coupled
plasma-mass
spectrometry (ICP-MS) scans. The Huffman results for scandium were coupled with values
provided by EMC at the inception of the project and are in good agreement.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 38 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 11.1 Analysis of Crushed and Blended Head Samples
Element
Limonite
( wt%)
Saprolite
( wt%)
Al Aluminium
9.93
4.41
As Arsenic
<0.005
<0.005
Ba Barium
0.042
0.072
Bi Bismuth
<0.01
<0.01
Ca Calcium
0.12
1.75
Ce Cerium
0.0129
0.0101
Cr Chromium
0.104
0.148
Cu Copper
0.004
0.004
Fe Iron
27.7
16.8
K Potassium
0.099
0.192
La Lanthanum
<0.0025
0.004
Mg Magnesium
0.298
3.16
Mn Manganese
0.51
0.603
Mo Molybdenum
<0.001
<0.001
Na Sodium
0.279
0.775
Ni Nickel
0.027
0.124
P Phosphorous
0.035
0.021
Pb Lead
<0.005
<0.005
Re Rhenium
<0.0005
<0.0005
S Sulphur
0.05
<0.05
Sb Antimony
<0.005
<0.005
Sc Scandium
0.0347
0.0258
Sr Strontium
0.007
0.016
Ti Titanium
0.743
0.283
V Vanadium
0.0587
0.0151
Y Yttrium
0.0007
0.0058
Zn Zinc
0.007
0.03
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 39 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Analyses performed by Hazen Research were carried out using four acid digestion followed
by a multi element ICP-AES scan. After substituting some internal standard elements (for
example, Hazen has historically used scandium as an internal standard to adjust instrument
drift) good agreement was obtained for the quantitative analysis, and all subsequent
analytical work was performed at Hazen.
The second shipment consisted of both bagged and loose mineralization in steel drums. The
entire shipment was relocated to poly drums in bags or loose as received. Because they
have been referenced in METCON reports, one bag labelled Batch 3 Gilgai limonite (Report
M1256A) and one bag labelled Batch 2 Gilgai saprolite (Report M1641A) were pulled for
laboratory studies. Each bag was separately blended, and splits were removed for head
samples, which were quantitatively analyzed at Hazen. Results are shown in Table 11.1.
The results were compared with prior analysis reported by METCON and determined to be
in good agreement.
A second split of the Batch 3 limonite was ground and screened to 100% passing 50 mesh,
297 micron and used for the extraction test work.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 40 of 120
Technical Report on the Nyngan Scandium Project
October 2014
12 Data Verification
12.1 Quality Control Measures and Procedures
It is considered by Maxel Rangott (Principal for Rangott Mineral Exploration Pty Ltd, ‘RME”),
the Qualified Person, that confidence can be placed in the resource figures quoted in Table
14.4. The analysis of the samples was conducted by ALS Chemex, applying methods that
Jervois has been using with confidence for some years after various check analyses in other
laboratories. ALS included standards, blanks and duplicates during the laboratory analysis
and provided certificates to verify this practice. There were no anomalies reported from this
control measure. Assay checks had been done previously on laterite samples
(predominantly from Jervois’ nickel/cobalt laterite deposits at Young, NSW), comparing ALS
Laboratories values and Becquerel Laboratories Neutron Activation assays at Lucas Heights,
NSW, and in Canada. Those assay results compared favorably.
The drilling program and sampling techniques on the Jervois 2006 (and 2008) drill program
holes were supervised by RME personnel, including the recording of sample recoveries
captured on the drill log sheets. The densities of the four lithologies have been carefully
analyzed and compared with the Jervois measured density figures for other laterite projects.
The results compare closely.
The drill hole locations were surveyed using a Garmin GPS12 XL instrument and a marker
pin inscribed with the drill hole number was placed in the collar. At the end of the drilling
program, Consulting Surveyors completed a controlled survey of the drill hole collars using a
Differential GPS system.
12.2 Limitations
The database and information prepared on behalf of Jervois Mining Limited by RME, and
verified by Maxel Rangott, the Qualified Person, relies on the industry professionalism of
information supplied by Anthony Jannink of Douglas McKenna and Partners, Duncan Pursell
of Jervois Mining Limited and ALS Chemex Australia. No discrepancies were noted in the
source data, indicating that Jervois Mining Limited employed significant internal QA/QC
while compiling it.
The data has been assembled with utmost care for accurate transfer and data entry by the
parties involved. However, it was not possible for Max Rangott to verify all of the data.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 41 of 120
Technical Report on the Nyngan Scandium Project
October 2014
13 Mineral Process and Metallurgical Testing
13.1 Proposed Flow Sheet
The proposed flow sheet for scandium oxide recovery from the Nyngan laterite deposit is:
•
Open pit mining
•
Mill feed de-agglomeration in a scrubber and ball mill
•
High pressure acid leaching in two batch autoclaves
•
Solid-liquid separation
•
Solvent extraction of scandium using a primary amine
•
Stripping of the amine with hydrochloric acid solution
•
Precipitation of scandium oxalate by oxalic acid addition
•
Calcination of the scandium oxalate to produce scandium oxide
13.2 Sample Selection and Delivery
Dr Nigel Ricketts was provided a number of metallurgical test work reports for review by
EMC Metals Corporation to examine the relevance of the metallurgical test work conducted
to date to the proposed flow sheet. To the best of his knowledge, the samples delivered to
Hazen Research and other test facilities that were used in the test work programs were bulk
samples taken from the original sample bags which contained drill cuttings for each meter of
the drilling program. Some samples were entirely limonitic whilst others were entirely
saprolitic and some were a combination of the two hosting clays. Prior to dispatch of the
samples to Hazen Research, the bags were stored in a locked, secure building in Nyngan.
Hazen Research received two shipments of laterite material from EMC Metals in 2010. The
first was a set of five small samples, three limonite and two saprolite samples, weighing from
1.4 to 8.6 kg each, which were used in the laboratory scale program. The second shipment
included 741kg of limonite and 371kg of saprolite for pilot scale test work.
The limonite and saprolite samples were separately dried and homogenised. Prior to
crushing, 51kg of limonite and 29kg of saprolite were extracted and saved as library samples.
Each sample type was then crushed to 100% passing 50 mesh (297μm) and re-blended. A
10kg split of each crushed sample type was saved as a library sample for further analysis
work is needed.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 42 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Representative head samples from each lithology were analysed by inductively coupled
plasma-optical emission spectrometry (ICP-OES). The results are shown in Table 10.1 with
the limonite sample containing 347ppm scandium and the saprolite sample 258ppm.
The five small samples were individually homogenised and representative splits of each of
the samples removed for analysis and testing. Semi-quantitative XRF scans were performed
at Hazen Research, followed by quantitative analysis of minor elements not considered
reliable in the XRF scan, namely scandium, cerium, lanthanum and phosphorus. These were
checked by an outside laboratory (Huffman Laboratories, Inc.) as a quality control measure.
The second shipment consisted of bagged and loose material in steel drums. Samples
referenced in Metcon reports labelled as Batch 3 Gilgai limonite and Batch 2 Gilgai saprolite
were used for laboratory studies. The results from these samples are shown in Table 11.1. A
second batch of Batch 3 limonite was also used in some of the extraction work.
13.3 Acid Bake Test Work
A substantial body of test work has been conducted on the acid bake process by CSIRO and
Hazen Research for recovery of scandium into solution. Whilst this process route has
subsequently been rejected by EMC Metals due in part to the high sulfuric acid requirement
and gas scrubbing requirements, it is of note because this process has been used to
produce leach solutions for the majority of the solvent extraction and subsequent scandium
oxide recovery test work.
While the acid bake process can achieve similar leach recoveries and produce leach
solutions of similar scandium tenor, there is a substantial difference in the solution chemistry
between the two processes. In particular, the levels of iron and aluminium in solution are
much lower in the HPAL process route. This should result in less onerous requirements on
the subsequent solvent extraction and precipitation processes for HPAL leach solutions.
13.4 Solvent Extraction Test Work
The solvent extraction test work has been conducted by a number of testing laboratories in
the final development of the process.
CSIRO reported in March 2010 (DMR-3370) on a range of process technology
developments for the Nyngan scandium mineralization including acid baking, flotation of
clays, solvent extraction and precipitation. The CSIRO report examined a number of
potential solvent extraction reagents including the primary amine system currently costed in
this study. This amine is selective for scandium over iron at a low pH that is consistent with
HPAL leach solutions and it was shown that stripping of the amine with hydrochloric acid
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 43 of 120
Technical Report on the Nyngan Scandium Project
October 2014
solutions was simple and effective. Extraction and stripping kinetics were consistent with
those required for an industrial operation.
The CSIRO work was somewhat limited though as it only examined extractants for the pH
range that was consistent with the acid bake approach. Further analysis of the results with
an HPAL solution as the feed to solvent extraction reinforces the current choice of primary
amine due to improved extraction of scandium at low pH values along with improved
selectivity over iron.
A comprehensive bench and pilot scale test program was reported by Hazen Research in
June 2011. This work involved the use of the primary amine of interest. The feed solution
was produced from the acid bake process and analysed at about 58 mg/L of scandium.
Bench scale shake-out tests were used to developed extraction and stripping isotherms that
were used to determine the pilot plant configuration. The bench scale tests were also used
to determine the preferred continuous phase and organic/aqueous ratios in the mixers.
The pilot plant operated as a 3-stage extract, single stage wash and 3-stage strip circuit,
identical in configuration to the current circuit reported on in Section 13.1. The addition of an
isodecanol modifier improved the phase disengagement times.
The scandium extraction using this configuration exceeded 99% and the scandium
concentration after solvent extraction achieved 890 mg/L. Using a higher concentration of
organic phase, extractions in the pilot plant achieved 97% and the solution tenor increased
to 2200 mg/L.
13.5 Scandium Oxide Precipitation Test Work
CSIRO have reported in their report DMR-3370 in March 2010 that precipitation of scandium
from solution using oxalic acid was effective for producing a scandium oxide product and
their test work produced scandium oxide of 97.45%. In this work, CSIRO conducted the final
work by neutralizing with ammonia solution to pH 1 before adding oxalic acid.
In January 2012, Hazen Research published the results of the scandium precipitation work
which was focussed on improving the scandium recovery from solvent extraction strip liquor
with oxalic acid. Hazen conducted a series of precipitation tests on the strip liquors from the
solvent extraction pilot plant trials, which contained scandium from 0.22 g/L to 1.7 g/L with
significant iron and other impurities. It is important to note that the iron levels in the Hazen
work were appreciably higher than the HPAL liquors proposed in this work (up to 15 g/L
compared to 1.15 g/L proposed).
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 44 of 120
Technical Report on the Nyngan Scandium Project
October 2014
In a single stage process, Hazen was able to produce calcined scandium oxide of greater
than 97% purity. A two-stage process was also examined that could produce 98-99.5%
scandium oxide purity, but with significant recovery loss requiring a recycle stream.
The process adopted in this work was the alternative process developed by Hazen which
has a hot wash cycle after calcination. This process produced 97.4% scandium oxide
product with 97.7% scandium recovery. The HPAL solution feed offers the promise of lower
iron levels in particular.
Further work on improving product purity was proposed but not further developed. The oxalic
acid to scandium ratio was found to be a critical parameter. Further development of the
precipitation parameters are likely to result in further improvements in the process.
13.6 High Pressure Acid Leach Test Work
The previous work on the acid bake route is largely superfluous in consideration of the
process description and flow sheet development outlined in this report. The high pressure
acid leaching (HPAL) route is an alternative to the acid bake route for preparation of
scandium-bearing leach solution. It has the advantage of reducing the iron and aluminium in
the leach solution within the leaching autoclave, making downstream solvent extraction and
scandium recovery easier. Sulfuric acid consumption is also lower using the HPAL process.
EMC Metals provided the results of HPAL test work conducted by SGS Canada. The first of
the reports was dated January 19, 2012 and the second June 14, 2013. The earlier report
looked at both HPAL leaching of limonite and re-leaching of acid bake residue using
samples from the acid bake test program at Hazen Research. The second report examined
only HPAL leaching of limonite and saprolite mineral samples from Nyngan.
Test work at SGS demonstrated that high pressure acid leaching of limonite samples from
Nyngan resulted in leach recovery of up to 87% at 270°C with a 90 minutes residence time,
using a sulfuric acid consumption of 300 kg per tonne of feed. Sixteen tests were conducted
at 2 litre scale.
The comparison work for two stage acid baking provided 85% scandium recovery but with
an acid consumption of around 1000 kg per tonne of feed, although with acid recycling, SGS
believed that ultimately an acid consumption of around 460 kg per tonne of mill feed could
be achieved.
HPAL leaching tests on the acid bake residue showed that 60-70% of the residual scandium
could be recovered but requiring an additional 250 kg/t of sulphuric acid in the HPAL process,
to give a combined scandium recovery of acid bake-HPAL leaching of the residue of 90%.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 45 of 120
Technical Report on the Nyngan Scandium Project
October 2014
SGS examined scandium recovery from solution in a series of 5 tests. Only the first of these
was conducted using HPAL liquor, the rest were conducted with acid bake solution provided
from the Hazen Research test program. The scouting type of work examined hydrolysis,
oxalate precipitation and fluoride precipitation. The work is not relevant to the flow sheet
developed for this current phase of work.
SGS also examined scandium recovery using ion exchange with iminodiacetic resin and
achieved 79% scandium recovery and successfully stripped the resins.
This preliminary phase of HPAL work led to the June 2013 series of work. In this work, both
limonite and saprolite samples were leached and it is relevant that the samples were used
“as is” and not subject to size reduction. The particle size of the limonite was screen sized
and found to be 80% passing 167μm. The saprolite was finer at 80% passing 22μm.
A series of 6 HPAL tests were conducted on limonite, saprolite or a combination of the two.
The final test HPAL6 on limonite is particularly relevant as it was conducted at the best
conditions from the previous work. In this test, 87% recovery of scandium was achieved after
60 minutes to achieve a solution tenor of around 80 mg/L of scandium with an acid
consumption of 265 kg/tonne of limonite.
Whilst further test work is required on samples of mineralised blends that are representative
of a mine plan and with further definition of leach variables, it is the opinion of Dr Nigel
Ricketts that the HPAL process has been proven to be technically viable for production of a
scandium-bearing leach liquor for subsequent upgrading and eventual scandium oxide
recovery.
13.7 Flotation Test Work
Whilst not a part of the current process under consideration in this report, CSIRO examined
the possibility of upgrading the mill feed by flotation of either the clay minerals or the goethite
matrix containing the scandium. Neither method was successful.
ArrMaz Custom Chemicals also conducted flotation trials and supplied samples to Hazen
research for analysis. The results of these trials also showed poor results in scandium
upgrading using flotation.
13.8 Ion exchange Test Work
Whilst not a part of the current process under consideration in this report, Hazen Research
has conducted a body of work for EMC Metals on ion exchange for the recovery of scandium
as a replacement for solvent extraction. This has included some resin-in-pulp studies on the
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 46 of 120
Technical Report on the Nyngan Scandium Project
October 2014
water leach after the acid bake approach. Ion exchange results are promising and further
work on this process variant is on-going.
13.9 Future Test Work
The following test work is recommended for inclusion into subsequent engineering study
work to reduce the technical risk in the flow sheet development and to examine options to
simplify the circuit and to further enhance financial outcomes:
•
Mill feed physical handling properties should be investigated by a suitably qualified
organization such as TUNRA.
•
Samples of limonite that represent the first years of production from the high grade
corner of the deposit should be examined to determine their leaching characteristics.
The leach response of all elements participating in the leach reactions should be
measured.
•
Further examination of likely water quality and the seasonality of water quality should
be examined for its effect on the process.
•
Laser particle sizing should be used to determine the particle size of the limonite
rather than the simple screening analysis used by the laboratories to date.
•
De-agglomeration (scrubbing) and screening test work should be conducted to
determine the potential for upgrading the feed to leaching and rejection of barren or
low grade coarse material.
•
Viscosity and settling characteristics of all slurry streams around the proposed
process plant should be determine, in particular final neutralized slurry
•
The effect of raffinate recycle on in-situ leaching within the Leach Feed Storage Tank
should be examined for acid consuming species such as magnesium as well as for
scandium.
•
Further HPAL work should be conducted using a number of variables including
temperature, slurry density, the effect of chlorides and residence time, using feed
solution chemistry provided by the METSIM model
•
The possibility of using finely ground saprolite instead of lime should be examined for
the partial neutralization before solvent extraction.
•
The need for partial neutralization before solvent extraction needs to be examined as
indications are that it may not be necessary (i.e. conduct some extraction test work at
higher feed solution acidities)
•
The replacement of ammonium hydroxide for partial neutralization by sodium
hydroxide or magnesium hydroxide should be considered to eliminate the need for
ammonia on site
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 47 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Further work on different wash solutions for improving the quality of the scandium
oxide product should be examined.
•
The choice of organic extractant should be re-visited to determine if a higher quality
product can be produced with a different extraction reagent.
•
Solvent extraction tests should be conducted with the new solution chemistry from
the updated METSIM model.
•
Solvent extraction stripping tests should be re-examined in light of the increased
organic loading of scandium to determine whether a lower strength hydrochloric acid
solution can be used, with and without added sodium chloride as an alternative to
sodium hydroxide.
•
Re-cycle and re-acidification of the scandium strip solution needs to be examined in
further detail to minimize hydrochloric acid loss.
•
A systematic examination of solvent extraction modifiers should be conducted to
determine which modifier provides the best phase disengagement behavior in both
the short term and in longer term contact trials.
•
Filtration testing on the pressure acid leach residue should be conducted so that
filtration as an alternative to the CCD circuit can be examined.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 48 of 120
Technical Report on the Nyngan Scandium Project
October 2014
14 Mineral Resource Statements
14.1 Resource Calculations
Intersection Lengths (for each regolith type) and their grades were obtained from the figures
entered on the 2006 drill-out program log sheets (drill holes NA54 to NA121). The 2006
holes drilled across the deposit were at two spacings - 50 meters and 100 meters. Selection
of the area drilled at 50 meter spacings was based on low overburden thickness, scandium
values for earlier holes obtained using a Niton portable analyser (which subsequently proved
to be unreliable), and the visual quality of the limonite horizon of the regolith - information
obtained from prior drill chip samples and drill logs.
Classification of the regolith mineralization types, selection of the density and grade data and
calculation of the resource figures were carried out by Mr Anthony Jannink, M. Arts, 1964
(Cambridge), FAusIMM, a very experienced geologist who had evaluated a number of
lateritic nickel-cobalt deposits in Australia, and who in 2006 was a director of Jervois.
The 50 meter spaced drilling program (25 meter sphere of influence for
each hole) is
considered to be sufficiently close spaced to justify the resources in that area to be classed
as ‘Measured’ under the NI 43-101 guidelines. The remaining 100 meter spaced drilling
resources have been labeled ‘Indicated’ and have a 50 meter zone of influence. No further
resources outside this drilled pattern were considered for the resource calculation.
The resources have been calculated by plan polygonal methods for each of the four
resource lithologies - haematite, limonite, saprolite and weathered bedrock. To be included
in the resource calculations, the sample intervals for each regolith category had to exceed
100ppm scandium in grade, and be at least 2 meters in thickness. The density figures used
(Table 14.3) are based on corresponding weights of the samples produced from the drill
holes and the assumed hole volume of 0.006207167 cubic meters per meter of hole drilled.
Guidance has also been taken from the experience of Jervois with other NSW laterites,
especially at their Young and Port Macquarie projects. At Young, densities were measured
from diamond drill core and are shown as a comparison to those calculated for the Nyngan
resource.
Samples that were obviously too large or too small or were wet/damp/contaminated were
excluded from the calculations. The calculated density figures are shown on the following
table and their weighted averages shown at the foot of the table. To obtain the lithotype
densities adjustments were made by making moisture content corrections. The figures given
in the table are those from the Jervois Young laterite deposits. In recent metallurgical test
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 49 of 120
Technical Report on the Nyngan Scandium Project
October 2014
work at Metcon, Brookvale, NSW, the 15% figure for limonitic regolith was confirmed in the
laboratory.
The resultant calculated densities compared with the figures used at the nickel/cobalt laterite
at Young are shown in Table 14.1.
Table 14.1 Calculated Densities
Resource
Nyngan (Sc)
Young (Ni/Co)
Hematite
Limonite
2.02
2
Saprolite
1.63
1.7
Bedrock
1.41
1.8
1.75
2.1
The figures used for the Nyngan lithologies were believed to be conservative. Overburden
figures quoted in this report are indicative and not based on mine plan design. The
resources were calculated by plan polygonal methods for each of the four regolith categories
- haematitic, limonitic, saprolitic and bedrock. The volume of each block is the polygonal
area times the drilled thickness for that category (see Plans NY-111, 112, 113 and 148).
The overburden volume was calculated as the polygonal plan area for each drill hole times
the depth to top of mineralization. Internal waste was treated in the same way – polygonal
plan area times the distance between upper and lower Mineralization boundaries. Using the
above parameters, the resource figures in Table 14.1 were calculated. These resources are
further defined in Tables 14.4 and 14.5, where the figures are given for all the elements
assayed for each of the lithology categories.
The resource to be first exploited will be the limonite measured resource of 1.5 million
tonnes at 330 ppm scandium. This resource unit is the shallowest (overburden of 12-15
meters) and richest. The plans show the location of the measured and indicated categories.
Table 14.2 Resource Grade
Nyngan Project
NI 43-101 Resource Summary
Category
Tonnes
Grade
(ppm Sc)
Cut-Off Sc
(ppm Sc)
Overburden
Ratio
(t/t)
Measured Resource
2,718,000
274
100
0.81:1
Indicated Resource
Total Resource
9,294,000
12,012,000
258
261
100
100
1.40:1
1.10:1
NI 43-101 Technical Report on the Nyngan Gilgai Scandium Project, Jervois Mining
Limited, Nyngan, New South Wales, Australia, dated March 2010, (Rangott Mineral
Exploration Pty Ltd).
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 50 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 14.3 Density Calculations
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 51 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 14.4 Nyngan Property – Total Resource Calculation
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 52 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 14.5 Nyngan Property – All Categories - Resource Calculation Sheet
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 53 of 120
Technical Report on the Nyngan Scandium Project
October 2014
14.2 Significant Assay Results
Table 10.1 of this report shows all of the significant scandium intersections by Section and
includes some holes drilled by prior explorers which contribute to the resource figures. The
figures do not include those from a confirmatory drilling program carried out in 2008. The drill
intercepts include all lithologies and are true widths.
Fifteen elements were analyzed by ALS Chemex using the following methods:
•
ME-ICP61s - up to 27 Elements by four acid ICP-AES
•
PGM-MS23 - Pt, Pd, Au by 30g charge fire assay with ICP-MS finish
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 54 of 120
Technical Report on the Nyngan Scandium Project
October 2014
15 Reserve Estimates
No Mineral Reserve is claimed for the Nyngan Scandium Project.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 55 of 120
Technical Report on the Nyngan Scandium Project
October 2014
16 Mining Methods
The tertiary laterization of the Nyngan Gilgai Complex has produced a fairly standard laterite
profile as outlined below:
•
Hematitic clay,
•
Limonitic clay,
•
Saprolitic clay,
•
Weathered bedrock,
•
Fresh bedrock.
The scandium-bearing material is essentially found in the limonitic and saprolitic clays,
although it is believed that there may be minor amounts of the scandium mineralization
contained in the bedrock. Weathering can extend up to 65 meters into the bedrock. The
hematitic clay carries little to no grade and averages 12 meters in thickness. Therefore, the
initial mining operation requires the stripping of the waste overlaying the scandium-bearing
clays.
16.1 Geologic Modelling
The deposit consists of scandium and platinum distributed within the weathered profile
developed over a mafic to ultramafic bedrock sequence. The economic mineralization is
confined to the hematitic clay, limonitic clay, saprolitic clay and weathered bedrock domains.
Given the metals have been mobilized through the weathered profile, enrichment has
occurred leading to economic accumulations of scandium. Given the emplacement method
of the mineralization, the mineralized zones tend to have near horizontal orientations
however zones consistently pinch and swell depending on local lithological, hydrological and
weathered profile conditions. Based on the high quality of the geology logging data and
confirmation of collar locations, the geological interpretation is deemed to be sound and
spatially valid.
16.2 Block Model Design for Pit Optimisation
The existing 2010 project resource estimate utilized a traditional polygonal technique,
whereby polygons were drawn around each drill hole to define the zone of influence of each
hole. The assay interval for each mineralized domain within each polygon was then used to
assign the average grade for each individual domain polygon. The weighted average sum of
all polygons for each zone was then calculated to provide a resource figure.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 56 of 120
Technical Report on the Nyngan Scandium Project
October 2014
There is a preference to use three dimensional modelling software packages, such as
Gemcom SurpacTM, to develop source block models for pit optimizations, rather than to use
polygonal models for this purpose. As a result, the data from the 2010 polygonal model data
was incorporated into a Gemcom SurpacTM block model. Resource data was coded into the
model using DTM surfaces representing the base of the alluvium, hematitic clay, limonitic
clay, saprolitic clay and weathered bedrock surfaces. These surfaces were constructed
using the geology logging information found within the resource database. Grades from the
polygonal estimate were assigned to blocks within the Gemcom SurpacTM block model for
each of the mineralized domains. Specific density information was also coded to the block
model using the DTM surfaces.
The results of the block model conformed closely to the volume estimates of the resource
using the polygonal estimate, validating the compatibility of the data to the two techniques.
The Gemcom SurpacTM block model technique was then able to be directly used by
Gemcom’s WhittleTM mine planning optimization software as the basis for all open pit
optimization studies.
16.3 Optimization Parameters
The parameters used to inform the optimization process were sourced from a combination of
industry average values and estimates supplied by EMC Metals.
•
The mining costs used were A$5 per tonne which is in line with similarly sized
operations elsewhere in Australia,
•
The sale price of scandium oxide was set at US$2,000/kg as proposed by EMC
Metals Corp,
•
The processing rate correlates with a small to medium tonnage operation,
•
The wall angles assumed for the pit design have an overall slope of 30°, which is
commonly adopted for this type of operation, given the shallow nature of the pit
design this angle is deemed suitable, and
•
The mining recovery is assumed at 95% which is reasonable given the significant
width and continuity of the mineralized envelopes.
One consideration during mining of these zones is that grade control processes will need to
ensure that the upper and lower contacts on each domain are adequately defined to limit
dilution. The mill recovery figure is derived from actual metallurgical test work observations
and therefore is deemed to be realistic. The optimization parameters used are shown in
Table 16.1.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 57 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 16.1 Whittle Optimization Parameters
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 58 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Figure 16.1 Pit Shell – Year 10
Figure 16.2 Pit Shell – Year 20
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 59 of 120
Technical Report on the Nyngan Scandium Project
October 2014
16.4 Overburden Removal
Although minor gravels exist throughout the resource, all drilling to date indicates that the
resource will not require drilling and blasting. Shallow ripping using small equipment will
produce material that can be handled by truck and loader. In addition, some further size
reduction will be required before the material enters the process plant.
16.5 Mining and Hauling to Plant
The process plant has been designed to treat approximately 250 tonnes per day. Therefore,
the mining operation will be quite small by industry standards. At this daily rate, it is desirable
to campaign mine and stockpile the mined material several times during the year, rather than
attempt to maintain a very small mining fleet throughout the year. It is envisaged that 25,00030,000 tonnes of scandium-bearing material will be mined during each campaign. Because
of the clay content of this material, the stockpile will be covered by tarpaulins to prevent the
ingress of rain and also to allow the material to drain and consequently reduce its moisture
content.
No geotechnical investigations have been conducted. All pit designs have been based
around 30° slope angles. The risk of instability of pit slopes is minimized because of the
relative shallow depth of the pit. However, a geotechnical study will be undertaken prior to
the commencement of operations at the Project.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 60 of 120
Technical Report on the Nyngan Scandium Project
October 2014
17 Recovery Methods
Limonite from the open cut mine is crushed to minus 30mm using a roll sizer and deagglomerated in a trommel scrubber to which raffinate and process water are added. The
drum scrubber discharge is directed to a screen and any +10mm material is discarded as
coarse rejects. The -10mm is directed to a ball mill operating in closed circuit with a screen
which directs material with a size of 80% passing 300µm to a pre-leach thickener. The
thickened slurry is stored before being leached with sulphuric acid in batch autoclaves. The
leach slurry is thickened and washed in a counter-current decant (CCD) circuit and the final
CCD overflow passes into solvent extraction. An organic phase is contacted with the
pregnant solution and is enriched in scandium. The organic phase is stripped of absorbed
scandium with a hydrochloric acid solution strip. Scandium is recovered from the strip
solution using oxalate precipitation. The scandium oxalate is calcined to produce scandium
oxide product which is packaged for sale.
17.1 Process Description
17.1.1 Feed preparation (Area 1000)
Scandium-bearing laterite will be recovered from the Nyngan mine using open pit mining
techniques and trucked to a run of mine (ROM) ore stockpile.
Material will be reclaimed from the ROM stockpile using a front end loader and added to a
feed bin. An apron feeder then feeds a roll sizer that produces a product of 100% less than
30mm. The crushed mill feed is then conveyed to a trommel scrubber to de-agglomerate the
limonite. The +10mm oversize from the scrubber is rejected to a coarse rejects bin. The 10mm material is directed to the ball mill discharge sump.
The ball mill will operate in closed circuit with a wet preparation screen being fed from the
ball mill discharge sump pumps. The +300μm oversize from the screen is directed back to
the ball mill feed chute. The underflow from the screen is the leach feed and is pumped to
the leach feed thickener.
Acidic raffinate is added to the drum scrubber and ball mill feed chute. This requires that the
grinding media in the ball mill is ceramic, not steel. All of the feed preparation equipment is
required to be made of materials or coated to be able to withstand acidic conditions.
17.1.2 Feed thickening (Area 1700)
The Leach Feed Thickener will thicken the slurry to 37% solids with the aid of flocculant
addition and the underflow of the thickener will be pumped to one of two, 250 m3 Leach
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 61 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Feed Slurry Storage Tanks. Superheated water from the flash down of the autoclaves will be
used to pre-heat the slurry in the tank to 80°C via the use of a spiral heat exchanger. Leach
Feed Thickener overflow is re-used in the trommel.
17.1.3 High pressure acid leaching (Area 2100)
The heated leach slurry will be used to feed one of two batch, mechanically agitated,
titanium-lined autoclaves operating in parallel. Slurry will be added and the pressure of the
autoclave will be increased by adding high pressure steam until the pressure has reached
6,300 kPa and the temperature has reached 212°C. Once the autoclave has reached 212°C
in the heat up cycle, the required amount of 98% sulphuric acid is added. The heat of mixing
of the acid raises the temperature to near the final leach temperature of 270°C.
Leaching continues for 60 minutes in the agitated autoclave. At the end of the leach cycle,
the pressure is relieved via the operation of a valve in the gas space above the slurry and
the autoclave pressure vents to a blast spool and then to a high pressure steam condenser.
Water is added to the condenser and this hot water is then stored in a superheated water
tank stored under pressure at 170°C before being used for a variety of heating tasks around
the plant. The autoclaves are depressurised in this manner until the pressure has reach 860
kPa.
Final depressurisation is achieved by opening the discharge valve near the bottom of the
autoclave, emptying the slurry into the flash vessel. A small heel will remain in the leach
autoclave. Once the transfer of slurry to the flash vessel is complete, the flash vessel is
vented to the atmosphere via a vent scrubber.
17.1.4 CCD circuit (Area 3000)
The leach slurry is thickened to 45% solids and washed of scandium-bearing liquor in a 6stage CCD circuit to reduce soluble losses of scandium in the leach residue. The six
thickeners in the circuit operate in a conventional manner producing a final leach residue
which is then subject to neutralization before tailings disposal and a clarified solution from
CCD-1 for feed into solvent extraction. Some of the raffinate from solvent extraction is
returned back into CCD-6 along with vent scrubber bottoms.
17.1.5 Partial neutralization (Area 4000)
The pregnant leach solution (PLS) from CCD-1 overflow is recombined with recycled
gypsum solids and then reacted with milk of lime to bring the pH up to a value of 0.5 prior to
solvent extraction. The two pre-neutralization tanks have the added function of cooling the
slurry before solvent extraction.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 62 of 120
Technical Report on the Nyngan Scandium Project
October 2014
The partially neutralized slurry is then thickened and filtered on a belt filter to produce a clear
solution to feed into solvent extraction. The PLS is further cooled to 45°C before being
added to the PLS Storage Tank.
The belt filter product is largely gypsum and is stockpiled before being added back into the
tailings stream.
17.1.6 Solvent extraction (Area 5000)
Scandium is extracted from the pregnant leach solution by contact with an organic extractant
dispersed in a solvent kerosene product. When contacted together, the scandium transfers
from the aqueous phase to the organic phase. Three stages of counter-current extraction
using mixer-settler units are required. The solution that is stripped of scandium (raffinate) is
passed through activated carbon columns to remove any entrained organic phase and then
returned to various areas of the feed preparation and CCD circuits.
The loaded organic is scrubbed with a water-acid-sodium sulphate solution to wash the
organic phase. It is then subjected to stripping of scandium with 3 molar hydrochloric acid
solution in three counter current mixer–settlers.
The loaded strip liquor (LSL) is then passed through a dual-media filter to remove any
entrained organic phase before passing into scandium recovery. The stripped organic
extractant is regenerated with sulfuric acid solution and then returned to the extraction circuit.
17.1.7 Scandium oxide recovery (Area 6000)
Scandium is recovered from the LSL by reacting with oxalic acid. Before precipitation, the pH
is adjusted to 1.3 with ammonium hydroxide solution. Oxalic acid is added in the three
Oxalate Precipitation Tanks at a temperature of 65ºC. The resultant slurry is settled in a
settling tank before being added to the Oxalate Filter. After washing with water, the filter
cake is an impure scandium oxalate product. The scandium oxalate is converted to
scandium oxide by calcining at 900°C.
The scandium oxide calcine is then re-leached with demineralised water in the Scandium
Oxide Soak Tank and filtered and dried. The dried product is then manually added into steel
drums as final product.
17.1.8 Final neutralization and tailings (Area 7000)
The underflow from CCD6 Thickener becomes the final residue to tailings disposal. Before
disposal, the leach residue is reacted with milk of lime in two stages. The first stage
neutralizes the slurry to pH 6 and the second stage to 8.5. The neutralized slurry is then
thickened to 40% thickener underflow density before being pumped to a lined tailings
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 63 of 120
Technical Report on the Nyngan Scandium Project
October 2014
storage facility. Decant water from this facility is returned to the circuit or is pumped to a
lined evaporation pond.
A lined evaporation pond is provided for evaporation of excess process water, or other saline
waters.
17.1.9 Water management
The feed water supply to the plant is raw water from the pipeline that services both Nyngan
and Cobar townships. This is near-potable water and the pipeline passes within 5 km of the
proposed process plant location and is pumped to raw water tanks on site.
The autoclaves are heated by steam, requiring the installation of a steam boiler. The batch
nature of the autoclaves means that the boiler duty needs to deal with intermittent steam
load. The raw water for the boiler requires demineralization in a reverse osmosis (RO) water
treatment plant. The brine from the RO plant is directed to the evaporation pond.
RO water is also used as feed to a package potable water facility which consists of filtration,
ultraviolet sterilisation and chlorination prior to storage in a potable water storage tanks. It
will then be distributed around site in a pressurised ring main.
Dedicated electric and diesel back-up fire water pumps supply water from the raw water tank
to the firewater mains throughout the plant site.
17.1.10
Reagents
A number of reagents are required for the process plant. These will all arrive by road
transport.
17.1.10.1
Reagent storage
Bulk reagent supplies will be delivered to site in a mixture of bulk tanker, drums, bulka bag
and transport containers. Reagents will be separated according to storage requirements,
chemical properties and potential hazards. All acidic reagents will be stored in bunded
facilities with acid-resistant concrete floors. Special consideration will be given to storing of
the organic chemicals for solvent extraction in a dedicated facility with spark-proof motors for
any pumping requirements.
17.1.10.2
Sulfuric acid
Sulfuric acid is the most significant consumable in the flow sheet. It will be trucked to site
from a coastal location in B-double trucks. It will be supplied as 98% strength and will be
offloaded from the trucks into a storage vessel of carbon steel. It will be pumped to the
autoclaves at the 98% level. The site plan allows for 10 days of storage on site.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 64 of 120
Technical Report on the Nyngan Scandium Project
October 2014
17.1.10.3
Hydrochloric acid
Hydrochloric acid is used in the stripping circuit of the solvent extraction plant. It will be
delivered to site in bulk transport at 33% concentration and be discharged to a storage tank
of 10 days capacity.
17.1.10.4
Lime
Quicklime will be delivered to site in either 1 tonne bulka bags or bulk transport. The lime will
be slaked in a vendor supplied package utilising tailings decant solution. The 20% w/w milk
of lime slurry will be continuously circulated via a ring main to Partial Neutralization, Final
Neutralization and the Ammonia Recovery Lime Reactor.
17.1.10.5
Flocculant
Space for up to three different flocculants has been allowed for in the plant design. A number
of thickeners and CCD thickeners are present in the design. Each flocculant will be supplied
in 25kg bags and be made into working solutions using vendor package jet-wet dosing
systems.
17.1.10.6
Extractant
A primary amine extractant will be used for extracting scandium from solution. It will be
supplied in 1 m3 IBC containers and will be used at 100% strength
17.1.10.7
Modifier
Exxal 10 will be used as the organic extractant modified to improve the disengagement of
the organic and aqueous phases in solvent extraction. It is likely that it will be supplied in
200L drums and will be added to the organic make-up circuit at 10% of the organic phase.
17.1.10.8
Diluent
The primary amine extractant will be diluted into Shellsol D70 diluent. The diluent will be
delivered in 1 m3 IBC containers and will be delivered at 100% strength to the organic makeup circuit.
17.1.10.9
Oxalic acid
Oxalic acid (C2O4H2) will be used to precipitate scandium from solution. Oxalic acid is a
white powder and will be delivered in bulka bags. The bulka bags will be emptied into a
mixing tank and demineralised water will be used for make up the solution to the desired
concentration. The arrangement will consist of a mixing and storage tank.
17.1.10.10
Sodium hydroxide
Sodium hydroxide (NaOH) will be used to react with HCl in the solvent extraction stripping
circuit to achieve the desired acid to chloride ratio in the strip solution. It will be delivered in
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 65 of 120
Technical Report on the Nyngan Scandium Project
October 2014
bulka bags. The bulka bags will be emptied into a mixing tank and demineralised water will
be used to make up the solution to the desired concentration. The arrangement will consist
of a mixing and storage tank.
17.1.10.11
Sodium sulfate
Sodium sulfate (Na2SO4) will be used as an additive to the solvent extraction organic wash
and regeneration solutions in the solvent extraction stripping circuit. It will be delivered in
bulka bags. The bulka bags will be emptied into a mixing tank and demineralised water will
be used to make up the solution to the desired concentration. The arrangement will consist
of a mixing and storage tank.
17.1.11
Services
17.1.11.1
Plant air and instrument air
A rotary screw compressor (duty and standby) will supply plant air and instrument air via air
dryers to dedicated air receivers. All compressed air on site will be instrument grade.
17.1.11.2
LPG storage and distribution
Liquefied petroleum gas (LPG) will be delivered to site in bulk and transferred to a storage
tank on site. LPG will be used predominantly to run the steam boiler.
17.2 Process Design Criteria
Based on the metallurgical test work conducted to date, a Process Design Criteria for the
operation was developed. The process plant is planned to be located just to the west of the
mine site. It is planned that mining will be conducted on a contract campaign basis and that
a stockpile of mill feed will exist at both the mine location and at the process plant site.
The process plant is planned to be operated 24 hours per day, 365 days per year as shown
in Table 17.1 which shows a summary of the key process design parameters.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 66 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 17.1 Summarised Process Design Criteria
Process Design Criteria
Metric
Rate
Operating Days per Calendar Year
days/year
365
Operating Hours per Day
hours/day
24
Hours per Year
hours/year
8,760
/rushing tlant Availability
%
33
/rushing tlant hperating Hours per Year
hours/year
2,891
/rushing tlant Ceed Rate
tonnes/hour
25.9
Plant Availability
%
85.6
Plant Operating Hours per Year
hours/year
7,500
Plant Feed Rate
dry tonnes/hour
10
Feed Source
type
limonite
Feed Head Grade
ppm Sc
371
Autoclave Availability
%
85.6
Autoclave Operating Hours per Year
hours/year
7,500
Autoclave Feed rate
dry tonnes/hour
10
Autoclave Operating Temperature
ºC
270
Batch Leach Time
minutes
60
Batch Leach Cycle Time
minutes
<120
Solvent Extraction Configuration
type
3E-1W-3S
Solvent Extraction Reagent
type
Primary amine
Scandium Precipitant
type
Oxalic acid
Final Product Purity
% Sc2O3
97-99%
Recovery to Final Product
%
84.4
Final Product Production Rate
kg/annum
37,975
17.3 Process Flow Sheet
A simplified process flow sheet in shown in Figure 17.1. The plant is configured into the
following WBS structure:
Area 1000
Feed preparation
Area 2000
High pressure acid leaching
Area 3000
CCD circuit
Area 4000
Solvent extraction
Area 5000
Partial neutralization
Area 6000
Scandium oxide recovery
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 67 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Area 7000
Final neutralization and tailings
Area 8000
Reagents
Area 9000
Services
17.4 Plant layout
The plant layout has been conducted to a preliminary nature and is shown in Figure 17.2.
The vessels have been sized according to scale as per the detailed mechanical equipment
list developed by Larpro for the project.
Preliminary sketches of the elevations of larger process equipment were developed for
estimating of structural steelwork and concrete quantities, although full engineering drawings
have not been developed. This sketch is shown in Figure 17.3.
The use of buildings has been kept to a minimum. The autoclaves, CCD circuit and SX
circuit are all located within acid resistant concrete bunds but have no roof over them. The
scandium recovery circuit is enclosed in a building to minimise contamination from dust.
The flammable reagents largely associated with the solvent extraction circuit are located in a
dedicated bunded area away from the main plant. The acids are located together in a
bunded area with an acid resistant concrete floor.
LP gas supply is located close to the boiler. Raw water supply will enter the site from the
north, and is expected to be located within the easement created by the entrance road from
the Barrier Highway.
The CCD thickeners have been designed to be all at the same level on steel supports.
The autoclaves will be mounted vertically. A steel support structure around the autoclaves
and pressure let down vessels has been included for ease of maintenance, particularly any
high pressure valves.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 68 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Figure 17.1 Simplified process flow sheet
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 69 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Figure 17.2 Proposed plant layout
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 70 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Figure 17.3 Preliminary sketch of autoclave layout
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 71 of 120
Technical Report on the Nyngan Scandium Project
October 2014
17.5 Power Requirement
Based on the mechanical equipment list and efficiency factors, the power requirement for the
process plant is 1.53 MW with a continuous average usage of 0.91 MW. The process plant is
very close to power infrastructure due in part to proximity to the 102 MW solar power plant
being built nearby by AGL and First Solar. Both high voltage (132kV Nyngan-Cobar line) and
medium voltage power lines pass close by to the project site.
The power load is split between the following areas:
Table 17.2 Electrical Load - Processing Plant
Electrical Load by Plant Process Area
AREA
1000
2000
3000
4000
5000
6000
7000
8000
9000
Process Description
Plant Feed Preparation
HPAL
CCD
Partial Neutralization
Solvent Extraction
Scandium Recovery
Tailings
Reagents and Lime
Water and Air Services
Total
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
kW
Absorbed
162
169
71
43
45
41
76
57
246
910
kW Total
190
283
118
77
62
48
198
66
487
1529
Page 72 of 120
Technical Report on the Nyngan Scandium Project
October 2014
18 Project Infrastructure
18.1 Power Supply and Distribution
This section describes the proposed electrical installation for the Project. The calculated
electrical load is provided in Table 17.2. This has been calculated from the mechanical
equipment list and has been moderated with factors that deal with utilisation estimates for
the various equipment. The leaching is a batch, intermittent process, so some of the
electrical load will be variable.
18.1.1 Power Source
Power to the site will be provided from connection to the 33kV overhead line which runs past
the site, some 3.5km to the north of the proposed process plant site. This line is owned by
Essential Energy. It is proposed to install a branch off this line running along the main
access road to the process plant. The installation of a 33kV/415V, 3MVA transformer will be
installed at the plant site close to the processing plant.
The electrical supply authority may agree to provide the overhead line and transformer as
part of a supply arrangement. In this case, the connection point will be the 415V terminals of
the transformer. This would reduce the capital cost but the supply rate is likely to be higher
to recover the cost of the installation. This is an item for negotiation during the next phase of
the project.
Supply is enhanced due to the installation of the 112 MW solar power station being
constructed close to the plant site. This will increase the power supply in the region and may
result in improved electrical supply options.
18.1.2 Switch room
A single main switch room will be located relatively central to the main process plant to
minimise the length of cable runs. There is no single large electrical load motor or furnace
that requires location in of the switch room in any particular location. The switch room and
control room are designed to be individual buildings. The switch room can be supplied as a
single module transportable building as can the control room. The switch room will need to
be located at permitted distance from the flammable liquid reagent area.
The switch room would contain:
•
Motor control center
•
415V DB
•
Control system cabinet
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 73 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Variable speed drives
•
Halon gas fire suppression system
18.2 Control System
The proposed control system will be a PLC based system with an operator interface unit
such as the Allen Bradley Panel View. A single PLC should have the capacity to control the
entire plant, although this should be reviewed in the next phase of study. The operation of a
number of pressure vessels will require a series of interlocks and safety features that may
require a higher level of control strategy and equipment.
18.3 Communications
Communications to the plant site will be provided by the installation of a buried fibre optic
cable extending from the Barrier Highway (neat Gilgai Road turnoff) to the site adjacent to
the main access road. This cable will terminate in the administration building and will provide
connection to Telstra’s WAN for telephone and internet services.
A fibre optic cable will also connect the administration building to the control room. This will
provide communications for telephone, internet, fire alarms and the control system.
18.4 Roads
The access road from the Barrier Highway to the plant side will be 6 meters wide and
approximately 5.7 km long. The road will be built as an all-weather gravel type road. It is
likely that the road will be slightly elevated compared to the surrounding terrain due to the
propensity of flooding during periods of heavy rain. It is likely that a “Crown Road” easement
will be acquired for the road. The road will be used for accessing the plant by operating and
maintenance personnel, supply of reagents and consumables and transport of product. It is
planned that the plant personnel will be housed in existing accommodation in Nyngan and
will drive the approximately 20km to and from site every day.
A mine haul road will be constructed for the short distance from the mine to the process
plant site. Plant roads are to be built within the plant boundary and will be all weather gravel
roads.
18.5 Water
Water will be provided to the site from the Cobar water service pipeline adjacent to the
Barrier Highway, some 5km from the raw water storage tank at the processing facility. This is
near-potable dam water from the Lake Burrendong Dam, situated between Dubbo and
Orange.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 74 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Cobar Shire Council receives bulk water supply from the Cobar Water Board. Cobar's raw
water comes from Burrendong Dam via the Macquarie River and Albert Priest Channel,
plus the ground catchment area around the Cobar storages. Water from the Macquarie River
is diverted at Warren via a 73km open channel (The Albert Priest Channel) to the Nyngan
Weir Pools. From here it is pumped via a pipeline 130km to the Fort Bourke Hill filtration
plant. It is this pipeline that will provide water for the Nyngan Scandium Project.
A 200mm diameter HDPE pipe is planned to be installed and buried alongside the new
access road to fill a site based water storage tank of 600 m3. This is a lined steel commercial
water tank. It has been assumed that there is enough pressure in the supply line to deliver
water to the site.
18.6 Site levee
Local authorities have requested that a levee be constructed around the site. The area
around Nyngan has been subjected to flooding at times from overflow of the Bogan River. A
levee around the site will avoid ingress of flood waters into the plant site and possible
contamination of flood water with chemicals used in the process plant. The design
parameters of the levee have yet to be negotiated.
18.7 Dams and Ponds
The site will incorporate the use of an evaporation pond, a tailings storage dam and a
sediment pond to capture any surface run-off and effluents from the plant site. The
chemicals will also be stored in bunded compounds so that any spills are contained.
The dams and ponds will have dam walls constructed from soil dug up from the body of the
dam and then will be lined with an impervious membrane. Leak detection underneath the
membrane will be used to ensure the integrity of the liner is maintained.
18.8 Plant security
A security fence will be built around the process plant. The process plant utilises a number of
high pressure vessels and corrosive liquids and access to site will need to be strictly
monitored and stringent induction of site visitors will need to be conducted. The security
fence will also need to be high enough to keep out grazing stock and kangaroos from
entering the plant site.
The scandium oxide product is a high unit value product valued at around US$2000 per kg.
A one tonne shipment of product is therefore worth US$2 million. However, no special
security requirements are planned for shipping as the product would be very difficult to sell
on the black market and the material from Nyngan is likely to have a chemical signature that
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 75 of 120
Technical Report on the Nyngan Scandium Project
October 2014
will be specific to the Nyngan operation and would be easy to trace. Road transport of
product in sealed steel drums to shipping facilities in a coastal location like Newcastle or
Brisbane is envisaged. Air freight of the product from Dubbo is also a possibility.
A security gate is planned for the south west corner of the plant site as part of the
administration complex. This will comprise the main office, reception, crib room, ablution
facilities and an on-site laboratory. These buildings are planned to be established as
transportable buildings.
18.9 Accommodation
Whilst the permanent workforce is small, the availability of rental accommodation in Nyngan
is quite low. It is likely that a small construction camp will be required during construction of
the plant. At the time of construction, the Nyngan solar power project will have been
completed and the large accommodation camp created for this project will no longer be used.
This provides an opportunity for purchase of a part of an accommodation camp that is
already set up in close proximity to the project.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 76 of 120
Technical Report on the Nyngan Scandium Project
October 2014
19 Market Studies and Contracts
19.1 Current Global Market Size
Various independent specialty metals authorities quote global market scandium volumes that
range from 2 to 10 tonnes per year. The source of these estimates most likely comes from
an annual US Geological Survey (USGS) statistical summary for scandium that has pegged
the annual consumption figure at “less than 10 tons” for many years. EMC believes the
current scandium market to be at or above 15 tonnes per year, based on apparent
consumption of oxide in both alloys and SOFC applications. Product sources in Russia and
China are difficult to track into global use statistics, and can take the form of aluminiumscandium (Al-Sc) 2% master alloy, in addition to scandium oxide. EMC Metals believes the
largest single user of scandium today is Bloom Energy (Sunnyvale, California), and while
their consumption is not publically disclosed, their supply sources would likely fall outside the
USGS data capture (internal sources and China/Russia) and volumes are believed to
approach the USGS global figure.
19.2 Scandium Products Defined
Scandium is almost always found in nature in form of a complex oxide. It is in this oxide form
that almost all scandium is sold, and consumed. Scandium oxide is also commonly referred
to as scandia.
Scandium can be purified into pure elemental form as a metal, although technically difficult
and expensive to do so. In this elemental form, scandium metal is principally purchased and
used for scientific and laboratory work. Scandium can also be purchased as a master alloy,
combined usually with aluminium.
In this form, Al-Sc master alloy typically has a 98%
aluminium content and a 2% scandium content. Customers wishing to stabilize materials
against heat would purchase scandia, and customers wishing to alloy scandium with
aluminium would purchase an Al-Sc master alloy. Master alloy manufacturers would make
their product using scandia. Electrical applications and lighting usually require and specify
99.9% purity, while alloying and heat stabilizing applications should be satisfied by 95-98%
grades. Scandium metal and oxide grades above 99.9% purity are reserved for science and
technical exploration of new applications.
19.3 Scandium Market Pricing
There is no central quoted market price or clearing house for scandium today. Scandium
oxide (and metal) sales take place between private parties at undisclosed prices. Quotes for
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 77 of 120
Technical Report on the Nyngan Scandium Project
October 2014
oxide product are influenced by quality specification (grade), volumes required, availability
through thin supply channels, and of course demand at any point in time.
Grade parameters are the single most important variant in oxide prices, for two reasons;
1. Quality upgrades are expensive and can negatively impact overall recoveries, and
2. It is technically challenging to make higher purity product, and the capability to
upgrade to very pure grades is not widely possessed.
High quality oxide is considered to be 99.9% grade or higher, as required for electrical
applications. Aluminium alloy applications do not require this grade of oxide, and can be
successfully manufactured from master alloy formed with product grading 95-98%. The
nature of the trace contaminants also matters, with some being more problematic than
others in specific applications. Radioactive elements, or metals that interfere with electrical
applications in the case of solid oxide fuel cells (SOFCs), are particular problems. Certain
elements in very minute quantities can disrupt the surface quality of very thin rolled
aluminium alloys. These scandium oxide quality issues aside, discounts for lower grade
product have greatly diminished lately, due to the current tight supply for any grade of oxide
product.
The USGS data sheet has provided an influential reference in defining the apparent price for
scandium oxide and scandium metal. The USGS posted prices that were notoriously low in
the 2008-2011 timeframe, as real market pricing during this period was demonstrated to be
considerably higher. In fact, the price change suggested by the 2011 USGS revisions were
actually more gradual and had happened sooner than the information in Table 19.1
otherwise indicates.
The USGS historic price estimates, as referenced below, were established by canvassing
traders and specialty metals sellers annually for offered prices, and they represent small
quantity sales only.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 78 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 19.1 USGS Historic Published Pricing for Various Scandium Products
USGS Pricing Statistics
Scandium Products (US$)
Sc Oxide
99.0% purity-per kg
99.9% purity-per kg
99.99% purity-per kg
Annual Estimated Pricing for Scandium Products
2008
2009
2010
2011
2012
2013
$900
$1,400
$1,620
$900
$1,400
$1,620
$900
$1,400
$1,620
$900
$3,700
$4,700
n/a
$3,700
$4,700
n/a
n/a
$5,000
Sc Metal - per gram
$152
$155
$158
$163
$169
$175
AL-Sc 2% Master Alloy-per kg
$74
$74
$74
$220
$220
$155
Source: USGS Mineral Commodity Summaries, revised annually for scandium.
A call to Stanford Materials Corp., the US supplier referenced in the footnotes of the USGS
Commodity Summary data sheet as a source of scandium quotations, confirmed (October 2,
2014) the current oxide price to be consistent with the price in the table above. Interestingly,
the Stanford website quoted US$1,350/kg for 99.99% oxide on this day, but direct discussion
with the trader indicated their web price to be incorrect, and noted recent sales had been
executed at prices over US$5,000/kg. Current prices on the Alibaba Group Holding Limited
(HK) website for 99.9% to 99.99% grade oxide range from US$3,500 to US$5,000, ex China
chemical manufacturers.
This data supports a 99.9% (‘three nines’) oxide spot price of around $5,000/kg today,
recognizing supplies are only available in limited quantities. Large quantity (tonnes) oxide
pricing is not available, and no long term sales contracts are known to exist.
19.4 Market Supply – Scandium Sources
There is no known primary scandium mining producer today. Most scandium production
comes from by-product recovery from the processing activity associated with production of
other metals, minerals, or rare earths. Scandium can be separated from tailings as a coproduct of other mineral processing businesses, from historic mineral processing tailings
sites, and from waste streams of operating chemical processing facilities, most notably
titanium dioxide facilities (TiO2 pigment plants) and uranium leach solutions.
Current significant scandium producers are located in China and Russia. Those and other
potential sources can be summarized as follows:
•
Chinese sources are spread over numerous producing assets. The Bayan Obo REE
(Nb-Fe deposit) mine, host to the world’s largest known rare earth element resource
and located in Inner Mongolia, produces some scandium. Other scandium sources
are located in southern and central China, typically based off leach solution waste
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 79 of 120
Technical Report on the Nyngan Scandium Project
October 2014
streams. China has additional potential scandium by-product sources from iron, tin,
aluminium, and tungsten mining assets, located in a number of Provinces,
•
Russian production has traditionally come from scandium content in tailings from the
Zheltye Zvoti mine in the Ukraine, formerly an iron and uranium underground mine,
closed in the 1980s. Stockpiles of scandium oxide and Al-Sc 2% master alloy, from
Russian strategic stockpiles built in the 1970s, continue to find their way onto
commercial markets. UC RUSAL has recently announced their intent to construct a
processing circuit at their Ural aluminium smelter facility to produce up to 2.5 tpy of
scandium oxide from ‘Red Mud’ waste material, for use in alloys at that and other
RUSAL aluminium facilities,
•
US and Canadian sources are very limited, and relate to historic fluorite and tantalum
mining and processing facilities. Some (but not all) former tungsten mine tailings are
known to contain potentially commercial amounts of scandium,
•
Australia has significant, large scale scandium resource potential in lateritic nickel
and cobalt resources in the States of New South Wales and Queensland. Several
potential scandium mining projects have been proposed, however there are currently
no producing mines and no mines under construction. Certain other Asian lateritic
nickel projects, specifically in Indonesia, the Philippines and New Caledonia share
this scandium by-product potential,
•
Madagascar and Norway have potential scandium resources, uniquely occurring in
pegmatite formations containing the mineral thortveitite. There are currently no
operating or proposed scandium mines in Madagascar or Norway.
The Russian UC RUSAL Red Mud project bears some further discussion. If this full project is
indeed built (pilot stage now), it will be the first to attempt to commercially extract scandium
from Bayer Process waste streams formed in the bauxite refining process into alumina. This
process is the most common one for refining bauxite globally, and it generates large
volumes of waste material with low levels of numerous residual metals. Red mud tailings
typically contain 50-110 ppm scandium, but certain tailings locations show concentrations of
150 ppm, depending on the mineralization type and precise process route. The processes
that essentially double the original concentration of scandium (typically 30-50 ppm) also
concentrate numerous other metals, specifically iron, aluminium and titanium, which are
energy and process intensive to separate from scandium. Consequently, scandium recovery
from these environmental legacy residues can be problematic, both as to technical
challenges and cost.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 80 of 120
Technical Report on the Nyngan Scandium Project
October 2014
19.5 Scandium Applications
Two principal and potential high volume markets await a reliable and expanded supply of
scandium. These two markets are:
1. Solid Oxide Fuel Cells (SOFCs), which are very efficient electrical generation devices
powered by a pure hydrogen source, or by natural gas/methane or a more complex
hydrogen source, and
2. Aluminium-Scandium alloys (Al-Sc alloys), superior performing variants of existing Al
alloy types.
The principle advantages scandium delivers in these two market applications are:
SOFCs – Scandium promotes critical and desired electro-chemical reactions at lower
temperatures, which substantially extends the commercial life of the unit, avoids higher cost
materials for containment, and increases electrical output over competing materials.
Aluminium Alloys – Scandium additions to aluminium alloys promotes grain refinement,
while retaining desirable superplasticity, and makes alloys better respond to precipitation
hardening techniques. These effects substantially increase the strength of aluminium alloys,
while also improving corrosion resistance and retaining weldability.
Other commercial applications for scandium include doping of ceramics for increased
hardness, applications in electrical devices that include laser parts and computer switches,
mercury vapor high intensity lighting, and TV/digital displays.
19.6 Scandium Markets
Scandium markets are directly and indirectly linked to energy prices. High and rising energy
prices promote the use of scandium in numerous applications.
The SOFC market is an emerging market with a revolutionary technology for efficient, clean,
distributed electrical power. While the global power market is enormous, the application for
this form of generation is particularly suited to certain power needs. Stationary power
applications are commercial now, and the industry leader (Bloom Energy) is poised to meet
rapid adoption. This market represents an immediate customer for reliable scandium supply
in the short term, with good growth potential over time and in global markets. The
transportation market is another potential adopter of SOFCs, and while it could be at least as
large, does not appear to be as near-term in technical development.
The aluminium alloy industry is a US$100 billion a year marketplace, and most aluminium
sold today is alloyed with other metals in some form or another to promote improved material
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 81 of 120
Technical Report on the Nyngan Scandium Project
October 2014
characteristics. Scandium represents a well-known additive in this alloy mix, and has
application in all manner of aircraft and automotive applications. Promising research is also
underway on conductivity and applications for high tension transmission lines. Scandium
promises strength, versatility and performance improvements in aluminium that enable
engineers to build higher performance structures. This market is potentially very large, but
should be seen as evolutionary in nature even though aluminium alloys are widely accepted
and integrated into products used today.
19.7 PEA Scandium Pricing Assumptions
The economic analysis for this Project contains a US$2,000/kg price assumption, over all
years, covering various grades of product offered from 97% to 99.0%. This price assumption
is predicated on an expectation that multi-year sales agreements can be negotiated and
signed with customers at or above these levels, on average, across several market
segments and preferably with more than one customer in each market segment. Spot pricing
opportunities on smaller quantities in early years will potentially offer considerably higher
pricing levels.
This assumed pricing level of US$2,000 is understood to enable scandium to bring value to
both the SOFC and Al-Sc markets for customers. If scandium is only made available at
today’s high spot pricing, the penetration into these markets will be only a fraction of what it
would otherwise be with more realistic pricing and assured significant supply offered to
markets. Volume uptake and widespread adoption of scandium-enhanced products will
require the assumed level of price to assure competitive advantage against competing alloys
and technologies.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 82 of 120
Technical Report on the Nyngan Scandium Project
October 2014
20 Environmental Studies, Permitting and Social or Community
Impact
20.1 Summary of Results of Environmental Studies
An initial “Conceptual Project Development Plan” was developed by R.W. Corkery in
December 2011 to address the relevant environmental issues surrounding this project. This
Plan has subsequently been published by the NSW Government on its website.
The recommendation from the “Concept Project Development plan” concluded to proceed
with the project from an environmental perspective.
Further steps for the development of this plan are to produce an “Environmental Impact
Statement” with supporting documentation as required by the NSW government. This work is
to be completed in a staged process involving relevant State government departments, local
government and community consultation.
The “Environmental Impact Statement” with supporting documentation is expected to be
completed by mid-2015 and submitted to the NSW government for approval.
20.2 Environmental Management Plans
Development consent from the NSW state government is required under Part 4, Division 4.1
of Environmental Planning and Assessment Act 1979.
The Project, where practicable, intends to adopt a progressive approach to the rehabilitation
of both mining and processing disturbances.
The Preliminary Impact Assessment of the project has been completed in the following areas,
without discovery of any issues that could interfere with project development:
•
Air quality & noise
•
Surface Water & ground Water
•
Ecology
•
Heritage
•
Traffic and transportation
•
Soils
The relevant sections of the “Conceptual Project Development Plan” of December 2011 by
R.W. Corkery have been condensed in the following sections 20.2.1 to 20.5.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 83 of 120
Technical Report on the Nyngan Scandium Project
October 2014
20.2.1 Waste and Tailings Disposal
As referred to in section 2.8 of the R.W. Corkery December 2011 “Conceptual Project
Development Plan” adequate provision has been proposed for the management of waste
and tailings disposal.
20.2.2 Site Monitoring
Rehabilitation will involve an ongoing monitoring and maintenance program following
completion of mining-related operations. Areas being rehabilitated would need to be
regularly inspected.
No time limit has been placed on post-mining rehabilitation monitoring and maintenance.
Rather, maintenance would continue until such time as the objectives are achieved to the
satisfaction of the relevant government agencies.
20.2.3 Water Management during Operational Life
The “Conceptual Project Development Plan” proposes to obtain water required for
operational purposes from the Bogan River using a combination of existing and proposed
infrastructure. The Environmental Impact Statement will include further information in relation
to the licensing and infrastructure aspects of the supply of this water.
Property water run-off control will need engineering and management as well. A range of
water management structures are contemplated to ensure:
•
That the active sections of the Site are not subjected to flooding,
•
That surface water flowing from areas of proposed disturbance is of an appropriate
quality to be discharged, and
•
That any water that is not of an appropriate quality to be discharged is retained within
the Site.
20.3 Project Permitting Requirements
The following key approvals for the Project will include:
•
Development Consent,
•
Environment Protection Approval,
•
Mining Lease,
•
Water Access Licenses,
•
Bogan Shire Council permit for Site Access Road,
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 84 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Dam Safety Approval, and
•
Cultural/Aboriginal Heritage review
Post-performance and reclamation bonds are a consideration upon Government granting the
mining lease. Reclamation costs have been directly provided for in project capital costs, but
no bonding costs prior to hypothetical closure in 2035 have been considered.
20.4 Social and Community Relationships
Preliminary consultation has commenced with both government agencies, and local
landholders. Government agencies and infrastructure authorities that have been or will be
consulted include the following:
•
Department of Planning and Infrastructure,
•
Department of Trade, Investment and Regional Infrastructure and Services – Division
of Resources and Energy,
•
Office of Environment and Heritage,
•
NSW Office of Water,
•
RTA,
•
Department of Primary Industries – Crown Lands,
•
Bogan Shire Council,
•
Australian Rail and Track Corporation, and
•
Essential Energy.
Negotiations with immediate landholders have commenced, with agreements established
such that environmental studies can commence. Further consultation with immediate
neighbours and the wider community will occur throughout preparation of the Environmental
Impact Statement.
20.5 Mine Closure Requirements
The project requirements for remediation and reclamation are, where practicable, to adopt a
progressive approach to the rehabilitation of disturbed areas.
Procedures to be applied to areas of disturbance associated with the mining activities will be
outlined in relevant Annual Environmental Management Reports and/or any amended Mining
Operations Plans.
The resource and mine life extends well beyond the proposed project duration of 20 years.
Notwithstanding the ability of the resource to support larger mining/processing operations, or
longer terms of operation, or both, an allowance for mine shutdown and site rehabilitation
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 85 of 120
Technical Report on the Nyngan Scandium Project
October 2014
has been included. The financial results in Section 22.9 of this PEA have a US$3M (constant
dollar) allowance in Year 20 to rehabilitate for areas currently related to this mining and
processing project. No offsetting plant salvage values were assumed.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 86 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21 Capital and Operating Costs
21.1 Introduction
The Nyngan Scandium Project is a relatively small development project by mining standards.
The mining activity, at under 300,000 tpy (overburden and resource) is a relatively low
tonnage program, with a simple mine plan, and is well suited to a contractor/campaign
program. The processing facility on-site is, however, relatively technically sophisticated, and
while small in size, does contain a number of steps, process stages, reagent inputs, and will
require high grade materials in design and construction. Much of the process can be
automated, and the day shift workforce is estimated at 10 plus 5 management, so the plant
is designed to take a small team to operate.
The initial capital cost for the project is US$ 77.4M, and the annual operating cost estimate is
US$22.5M.
21.2 Capital Cost Estimate
21.2.1 Summary of the Capital Estimate
Table 21.1 shows a summary of the initial capital cost estimate in Australian dollars and
converted to US dollars as well. Sustaining capital costs are addressed separately.
Table 21.1 Summary of initial capital costs
Nyngan Project
Capital Cost Summary
(Both A$ and US$)
Pre-Stripping Cost
NI 43-101 PEA Result
A$ Cost
US$ Cost
(M)
(M)
$1.7
$1.6
Direct Mechanical Costs
Process Plant Mechanicals
Plant infrastructure
Freight and Start-Up Costs
Sub Total Mechanicals
$40.8
$13.1
$2.3
$56.2
$36.7
$11.8
$2.1
$50.6
EPCM (18%-Mechanicals)
Contingency (20%-inc EPCM)
Owners Costs
Working Capital
Total Capital Cost
$10.1
$13.3
$1.4
$3.3
$86.0
$9.1
$11.9
$1.3
$3.0
$77.4
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 87 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21.2.2 Basis of Estimate – General
Because of the relatively small scale of this project, the use of estimating percentages that
are commonly used throughout the engineering industry were moderated where necessary,
to take into account the small size of equipment at the back end of the process plant. This is
particularly so for the scandium recovery section of the process plant where, output is under
5 kg/hour, and some manual handling of product is sufficient. Many of the tanks are small
enough to employ small industrial and agricultural tanks and piping methods, where
appropriate.
In contrast, HPAL operations require the use of large, insulated pressure vessels made from
special materials. Exotic alloys, stainless steel and titanium have been specified where they
will be in contact with corrosive or hot solutions. Extensive use of FRP tanks and pipes have
been utilized in design and costings wherever possible, for processes operating at
atmospheric pressure.
21.2.3 Estimating Accuracy
The overall estimating accuracy on the PEA is considered to be +/- 30%.
Over 70% of the mechanical and equipment items were sourced from direct vendor budget
quotes. Preliminary designs were conducted to develop quantities for structural steel and
concrete. Specialist piping was developed from a material take-off and factored for the rest
of the plant. Most of the infrastructure items were taken directly from a previous Report done
for management by SNC-Lavalin in 2012, with an accuracy of +/- 35%.
21.2.4 Base Currency and Estimate Base Date
Pricing is based on conditions as at the 16 September 2014.
Most of the project pricing was received from Australian suppliers as A$ quotes. Some of the
equipment, including the twin batch autoclaves, flash vessel, and agitator systems, was
quoted from suppliers in US dollars (4.5% of total) or in Euros (2.5%). All quotes and
estimates were ultimately summarized in US$, at an exchange rate of 1US$=A$1.11
(A$0.90).
21.2.5 Pre Stripping Cost Detail
The mine plan calls for pre stripping 340,000 bank cubic meters (BCM) of overburden prior
to mining resource for mill processing, for a total cost of A$1.7M. This will be done with
contractor resources, at a cost of A$5/BCM. The material moved to initiate the production pit
will be used to build berms, water management levies, and roads on site. An additional
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 88 of 120
Technical Report on the Nyngan Scandium Project
October 2014
A$0.7M is provided for road works, both construction and gravel bedding/drainage material,
as necessary.
21.2.6 Initial Pricing and Quantity Development-Plant Cost
The cost estimating team began the capital cost estimation process by developing an initial
equipment list, in conjunction with the metallurgical team. That list included a mechanical
equipment group, pressure vessels and associated equipment, a plate-work estimate
including chutes and hoppers, storage tanks/requirements, and established kW ratings on all
drives required.
From this initial equipment list, a process plant layout was produced, and an HPAL area
arrangement drawing developed, to more clearly designate pressure vessel relationships.
From these drawings, concrete and steelwork quantities were assessed for each sub-area
within the process plant, after a preliminary design of the area was conducted. In the HPAL
area, specific high pressure pipe-work quantities were calculated from the layout drawings.
Insulation quantities were calculated from the surface area of vessels and large pipes. Key
quantities of structural materials were then estimated, specifically:
•
Concrete quantity estimate - 1040 m3
•
Structural steelwork quantity estimate - 113 tonnes.
21.2.7 Process Plant Mechanical Equipment
Details on mechanical equipment costs are shown in Table 21.2.
Table 21.2 Summary - Mechanical Equipment Capital Cost Detail
Nyngan Project
Process Plant Capital Costs Detail
(Both A$ and US$)
Earthworks
Mechanical, Plate work, HPAL Piping
Concrete
Structural steel
Buildings
General Piping (8% of MEL)
Elect. & Instrumentation (15% of MEL)
Process Plant Mechanicals Total
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Larpro 2014 PEA Result
A$ Cost
($M)
US$ Cost
($M)
$0.10
$29.81
$2.60
$1.30
$0.10
$2.38
$4.47
$40.76
$0.09
$26.84
$2.34
$1.17
$0.09
$2.14
$4.02
$36.68
Page 89 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21.2.8 Process Plant Discipline Pricing
21.2.8.1 Earthworks
Earthworks pricing was taken from a previous study done by SNC-Lavalin, adjusted for
current estimates of labor rates and cost.
21.2.8.2 Mechanical Equipment, Tanks, Platework, and HPAL Specialist Piping
Mechanical items, tanks and specialist piping within the HPAL section, as detailed in the
Mechanical Equipment List, have been individually priced. By dollar value, 70% of this
pricing comes from direct vendor-sourced budget pricing responses, the remaining from
database figures. For the major equipment items, up to 4 suppliers where appropriate were
asked to quote.
In the case of the solvent extraction equipment, a modular design from Outotec was
received incorporating the mixer-settler units, pumps, internal pipe work and electrical fittings
as necessary. Modular designs have been considered for other aspects of the plant, but
have not been sufficiently progressed to be incorporated at this stage.
Erection and installation hours have been estimated from first principles and an overall site
rate of A$226 per man hour has been applied based on recent experience. This figure is a
gang rate and includes all costs of labor, supervision, equipment, contractor’s overhead and
profit, plus any crane support of less than 100 tonnes capacity.
21.2.8.3 Concrete
Concrete has been priced at an average of A$2,500 per cubic meter throughout the plant.
Much of the concrete supply is simple slab on ground work, due to the relatively small size of
the process equipment, but still requiring nib walls and footings. Ring beam footings have
been designed for the large tanks, both autoclaves and the shared flash vessel.
21.2.8.4 Structural Steel
Structural steel has been priced at an average supply rate of A$6,500 per tonne and an
erection rate of A$5,000 per tonne (22 man hours per tonne at A$226/hr). The main area of
structural steel use is in the HPAL circuit, where the autoclaves need to be vertically
supported above ground, with suitable clearances for operation and servicing, above
concrete foundations. A preliminary structural steel design was produced around a
preliminary configuration and location, including both plan and elevation view drawings of the
area.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 90 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21.2.8.5 Buildings
An allowance has been made for light building structures for workshop facilities and the
scandium precipitation and recovery area. This is the only part of the process plant covered
by a building. Wherever possible, demountables, modular buildings, and freight containers
are planned to be employed for offices, workshops, warehouses and storage facilities.
21.2.8.6 General Piping
A calculation was made for specialist, corrosion and pressure certified piping length in the
HPAL area, and for insulation and custom flange work that would be required.
Piping in the solvent extraction area is largely included in the modular package.
The remainder of piping has been assessed at 8% of the equipment list pricing and is likely
to be small bore piping extensively utilising site run HDPE pipe.
21.2.8.7 Electrical and Instrumentation (Plant)
Most of the electrical cost on the project is estimated in the infrastructure area, although
some plant wiring and electrical is included in the mechanicals section. Electrical and
instrumentation works for the solvent extraction module from Outotec are included directly in
the price of their modular unit. General plant electrical and instrumentation requirements
have been assessed at 15% of the equipment list pricing.
21.2.8.8 Infrastructure
Infrastructure quantities and pricing have been utilised from the previous SNC-Lavalin study.
However the pricing was adjusted where necessary to incorporate the current all-inclusive
rates, and a contractor mark-up of 10% has also been applied to electrical materials. Labor
adjustments were made as follows:
•
Earthworks
A$200/man-hour
•
Electrical
A$220/man-hour
•
Pond Liner installation
A$175/man-hour
•
Water supply HDPE piping
A$191/man-hour
Details of infrastructure capital costs are shown in Table 21.3.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 91 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 21.3 Summary – Infrastructure Capital Cost
Nyngan Project
Infrastructure Capital Costs Detail
(Both A$ and US$)
Evaporation Pond
Tailings Dam
Sediment Basin
Drainage & Fencing
Access Road
Transformer, Switchroom,Control Room
Site Office Building
Workshop & Maintenance Building
Site vehicles & Light Equipment
Incoming Water Supply Piping
Incoming 33kV power line
Fibre Optic Comms
Infrastructure Cost Total
Larpro 2014 PEA Result
A$ Cost
US$ Cost
($M)
($M)
$2.30
$4.32
$0.03
$0.15
$0.66
$2.51
$0.12
$0.10
$0.40
$1.44
$0.51
$0.53
$13.06
$2.07
$3.89
$0.03
$0.13
$0.59
$2.26
$0.11
$0.09
$0.36
$1.30
$0.46
$0.48
$11.76
The following specific electrical items have been included in this area:
•
Substation and transformer,
•
Bus duct transformer to main isolator at the main switch room building,
•
Control room and main switch room building,
•
Main switchboard,
•
PLCs and hardware,
•
Operator workstations,
•
UPS and auxiliary power units,
•
Plant software development and installation, and
•
VoIP and telephone system.
21.2.9 Freight and Start-up Costs
This cost area is intended to collect construction and erection costs that are typically not
included in the EPCM cost, and the costs are detailed in Table 21.4.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 92 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 21.4 Summary – Freight/Start-up Capital Cost
Nyngan Project
Freight and Start-up Costs Detail
(Both A$ and US$)
Heavy Lift Craneage
$0.20
$0.18
Sea Freight Cost
Local Freight Allowance
Vendor Rep Allowance
Commissioning Spares
First Fills
$0.30
$0.89
$0.06
$0.40
$0.50
$2.35
$0.28
$0.80
$0.05
$0.36
$0.45
$2.12
Subtotal Start-up Costs
21.2.10
Larpro 2014 PEA Result
A$ Cost
US$ Cost
($M)
($M)
Craneage
There is only a small requirement for heavy lift cranes. An allowance of A$200,000 has been
made for crane hire in excess of 100 tonnes lifting capacity. Smaller cranes are included in
the all-in site rates.
21.2.11
Freight Costs
Sea freight has been included at 5% of the ex-works value of imported equipment (A$6M) A
local freight allowance of 3% of list pricing on mechanical items totals has been included for
local sourced items.
21.2.12
Vendor Representatives
An allowance of A$60,000 has been considered as sufficient for equipment vendor
representation during installation and commissioning.
21.2.13
Spare parts
A commissioning spares allowance of A$400,000 has been allowed to cover mechanical,
electrical and in particular valve requirements.
21.2.14
First Fills
An allowance for first fills of A$500,000 has been considered. This includes a calculated
A$170,000 for inventory of organic phase in the solvent extraction circuit.
21.2.15
Engineering, Procurement and Construction Management (EPCM)
EPCM costs (US$9.1M) have been applied at an industry standard 18% of total estimated
costs with consideration given to the limited design input at this stage of the process
development.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 93 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21.2.16
Contingency
A contingency level has been set at 20% (US$11.9M). This contingency figure was
calculated on the project total direct cost of US$60M, which includes the EPCM estimate, but
excludes owner’s costs and the working capital allowance (US$5.8M)
No allowance has been made in the capital cost estimate for escalation between time of this
PEA and actual equipment purchase.
21.2.17
Owner’s Costs and Working Capital
A summary of the owner’s costs and working capital included in the estimate is shown in
Table 21.5.
Table 21.5 Summary – Owner’s Capital Cost
Nyngan Project
Owners Capital Costs Detail
(Both A$ and US$)
Water License - Purchase
Construction Mess/Accomodation
Construction Insurance
Working Capital
Total Owners Costs and WC
Larpro 2014 PEA Result
A$ Cost
US$ Cost
($M)
($M)
$0.25
$0.70
$0.44
$3.30
$4.69
$0.23
$0.64
$0.40
$3.00
$4.26
Specific detail on select items as follows:
•
Initial water license – a figure of A$250,000 has been provided to purchase a noninterruptible clean water delivery right, to be purchased from a private party,
•
Messing and accommodation during construction – estimated at A$697,000 ($85 per
day for 82,000 man hours), based on the assumption that the camp will be the
construction camp already set up for the Nyngan Solar Project which will become
vacant in time for construction of this project,
•
Construction insurance- US$0.4M, for one year, based on a quote from EMC’s
existing carrier, to cover site insurance during construction, environmental accidents
during construction, and shipment losses on transported (FOB) items for
construction,
•
Working capital – US$3M, represents 50 days of cash (C1) operating costs.
The estimator team generated a list of items not included in this project capital cost estimate,
which fall into two categories;
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 94 of 120
Technical Report on the Nyngan Scandium Project
October 2014
1. Pre-project costs to be borne by the owner prior to construction, and
2. Costs that may or may not be included in EPCM or other construction expense items
and would be a part of project capital.
That list is as follows:
Potential Owner’s Costs
•
Costs of geotechnical investigations and soil testing,
•
Costs of mineral resource drilling, metallurgical test work programs, and mining
studies,
•
Costs of property environmental studies,
•
Costs to complete work required to be granted a mining license on the property, and
•
Pre-project marketing costs and legal fees.
Potential Project Capital Costs
•
Land purchase or leasing costs,
•
Technology fees,
•
Community assistance and development programs, donations and sponsorships,
•
Extra, non-planned commissioning and ramp-up costs, which could include extra
training costs, or extended pre-production staff and operating costs, and
•
Capitalized insurance spare parts, not included in commissioning spares.
In addition to these capital items, additional risks are present with a strengthening Australian
dollar or other exchange rate exposures, and to negative variations in project scope.
21.3 Project Operating Cost
21.3.1 Operating Cost Summary
This section defines all annual operating expenses for mining, processing, purifying and
selling product to end use markets. Table 21.6 shows the operating cost summary for the
project. Figure 21.1 shows the process plant operating costs in a graphical form highlighting
the major operating cost items.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 95 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 21.6 Operating Cost Summary
Nyngan Project
OpEx Mine/Process Expense
(A$ & US$))
Larpro 2014 PEA Result
Annual Cost
Annual Cost
A$ M
US$ M
Mining Costs
Stripping Cost
Mining Cost
Total Mining Costs
$1.19
$0.37
$1.56
$1.07
$0.34
$1.41
Processing Cost
Labor Cost
Utilities Costs
Gas/Heat Costs
Acid Costs (H2SO4 & HCl)
Lime (neutralizer)
Other Reagents
Lab Costs
Consumables
Total Processing Costs
$4.32
$0.88
$0.67
$9.86
$1.00
$2.91
$0.28
$1.08
$21.00
$3.89
$0.79
$0.61
$8.87
$0.90
$2.62
$0.25
$0.98
$18.90
$0.83
$1.48
$0.61
$0.75
$1.33
$0.55
$25.49
$22.94
Marketing & Insurance
Maintenance Spend
Mobile Equipment Cost
Annual Cash Operating Cost
Figure 21.1 Operating cost summary by area
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 96 of 120
Technical Report on the Nyngan Scandium Project
October 2014
An examination of the detail that generates Figure 21.1 shows that the reagents are by far
the largest component of operating cost with sulfuric acid supply being over half of the
reagent cost.
21.3.2 Stripping and Mining Cost
The annual mining operation is very small, requiring a delivery to the plant of only 75,000
tonnes of resource per year. Strip ratios are low, and as both overburden and mill feed will
be free-dig, they will not require blasting. Annual costs are estimated to be US$1.4M per
year.
The mining operation is planned as a contractor task, and expected to be conducted in
campaigns of one month, three times per year. Costs for overburden removal are estimated
to be A$5/BCM. Mining costs are estimated to be A$3.50/tonne, and will climb to A$5/tonne
with hauling and stockpiling costs. See Chapter 16 for more detail.
21.3.3 Process Plant Operating Costs
21.3.3.1 Labor cost
The Nyngan processing plant requires a relatively small workforce. A workforce plan was
developed and specifies a workforce of 37 staff total. The process plant will operate 24x7, on
an 8-hour shift, 4-panel basis, with 5 operators per shift (including supervisor), plus one
multi-skilled maintenance operator and one safety/security officer per shift. Management (5),
and lab/metallurgy/environmental (5) will operate on day shift only, 5 days per week basis.
Labor rates were developed from a Larpro database of labor rates and was checked against
rates supplied from a recently opened mineral processing concentrator in the Nyngan vicinity.
It is anticipated that the majority of the workforce will be recruited from the regional area,
which includes a number mines and mineral processing operations.
21.3.3.2 Water Costs
Water will be provided to the site from the Cobar service line adjacent to the Barrier Highway,
approximately 5 km from the project site. Raw water will be piped under pressure to a raw
water storage tank on site. All water will be treated through a water treatment plant on site.
Operating costs for the reverse osmosis plant were provided by Osmoflow as part of the
discussion around supply capital cost.
Water permit conditions have been negotiated with the Department of Primary Industries
(Office of Water) in Dubbo. Although no permit currently exists, negotiations with a water
broker have commenced. Likely fees for a 200 ML annual consumption are A$250,000 for
the water entitlement and then A$5,000 per annum for a usage fee.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 97 of 120
Technical Report on the Nyngan Scandium Project
October 2014
21.3.3.3 Gas/Heating Electrical Costs
LPG gas will be used mainly for the operation of the steam boiler. It is anticipated that it will
be delivered to site in B-Double trucks and transferred to a pressurised 50 tonne bullet on
site. This will provide approximately 3 days of storage. Elgas have provided prices for both
LPG and LNG supply, including installation and bullet rentals.
21.3.3.4 Power Costs
Electrical power consumption for the process plant has been calculated based on the
mechanical equipment list. The electricity market is deregulated in Australia and supply
prices are highly negotiable depending on a variety of factors. The supply charge is usually
comprised of factors such as a network access charge, consumption amount and the time of
day that consumption has occurred. Prices charged during peak periods are usually higher
than off-peak. In lieu of detailed electrical engineering, a supply price of A$0.1055 per kW/h
has been used based on supply prices provided to other mineral processing operations in
regional NSW.
21.3.3.5 Reagents (including acids, lime and other reagents)
The largest element of operating cost for the processing plant is reagent supply. Sulfuric acid
supply in particular is the single largest component of operating cost. Figure 21.2 shows the
proportion of cost made up from the individual reagents.
Reagent Cost Summary
1%
1%
5%
Lime, CaO
Sulphuric Acid, H2SO4
Hydrochloric Acid, HCl
7%
Organic Extractant, Primene JM-T
9%
Organic Diluent, Shellsol D70
0%
8%
Sodium Sulphate, Na2SO4
1%
Sodium Hydroxide, NaOH
0%
13%
55%
Ammonium Hydroxide, NH4OH
(25%)
Oxalic Acid, H2C2O4
Liquefied Petroleum Gas, LPG
Flocculant
Figure 21.2 Split of Operating Costs
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 98 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Budget prices of all reagents have been sourced from suppliers. The sulfuric acid price is
based on non-Australian supplied “white” sulfuric acid delivered to the Nyngan site. Potential
exists for cheaper sulphuric acid supply from the Nyrstar smelter in Port Pirie in South
Australia. The current smelter configuration produces “black” acid which would be suitable
for addition to the autoclave. However, the Nystrar smelter acid is contracted via long-term
contract to Interacid until the end of 2015. In early 2016, the redeveloped smelter at Port
Pirie is due to come on line. This will provide higher purity “white” acid and at larger
quantities than currently available. Therefore negotiations for future acid supply from Port
Pirie offer the promise of reduced sulfuric acid costs.
Lime is provided as bulk supply of quicklime with a lime slaking plant included in the capital
cost.
21.3.3.6 Laboratory Costs
The product produced from the Nyngan facility is subject to very high standards of purity,
and that purity must be achieved while minimizing operating costs. It is essential to locate
and staff a laboratory facility on-site, to enable accurate process analysis, high quality
product assays, and product quality assurance through certification of standards, and to be
able to do so in real time in support of plant operations. In addition to a full time laboratory
chemist (included in labor costs), the operating costs estimate includes US$250,000 in
annual costs for operation of the on-site facility. This budget provides for assays, some offsite analyses, a limited amount of metallurgical test work, and an allowance for
environmental test work consistent with requirements to meet environmental licence
conditions.
21.3.3.7 Consumables
As well as reagents, consumables have been handled as a separate cost. Table 21.7 shows
the allocation of operating cost to consumables. The return of acidic raffinate to the feed
preparation circuit would result in excessive consumption of steel grinding media. Grinding
media planned for use in the ball mill is therefore a ceramic product called Steatite from
CeramTec in Germany.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 99 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 21.7 Summary of Consumables Costs
Nyngan Project
Plant Consumables Expense
(A$ & US$)
Larpro 2014 PEA Result
Annual Cost
Annual Cost
A$ M
US$ M
Crusher Liners
Scrubber and Mill Liners
Grinding Media
Screen Panels and Cyclones
Slaking Mill Liners
Slaking Mill Media
Filter Cloth
Woven Mesh Filter Cloth
Consumables Total
$0.17
$0.33
$0.02
$0.09
$0.15
$0.01
$0.22
$0.10
$0.16
$0.30
$0.02
$0.08
$0.14
$0.01
$0.19
$0.09
$1.08
$0.98
21.3.3.8 Maintenance
Maintenance cost has been covered as a varying percentage of installed mechanical cost by
operational area. Maintenance staff labor has been included separately in the labor cost
category. Table 21.8 shows the allocation of maintenance costs by area. The HPAL area will
represent the most significant set of maintenance requirements.
Table 21.8 Maintenance Cost Derivation
Nyngan Project
Annual Maintenance Expense
(US$))
Plant Feed Preparation
HPAL and Neutralization
Counter Current Decant
Partial Nutralization
Solvent Extraction
Precipitation and Purification
Tailings Neutralizaiton and Disposal
Reagents
Water and Air Services
Maintenance Expense - Total
Larpro 2014 PEA Result
% of
CapEx
Annual Cost
Capital Costs
US$ M
US$ M
5.0%
7.0%
3.0%
3.0%
4.0%
4.0%
2.5%
2.5%
2.0%
$1.67
$10.97
$3.51
$1.09
$2.60
$1.09
$1.20
$1.99
$5.70
$29.80
$0.08
$0.77
$0.11
$0.03
$0.10
$0.04
$0.03
$0.05
$0.11
$1.33
Cost
US$/tonne
$1.11
$10.24
$1.40
$0.44
$1.39
$0.58
$0.40
$0.66
$1.52
$17.73
21.3.3.9 Mobile Equipment Cost & Miscellaneous Allowances
The project will have a small fleet of vehicles on site, including two utility vehicles, two small
cranes, one forklift, one front end loader, one 15 t truck and a compactor machine for tailings
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 100 of 120
Technical Report on the Nyngan Scandium Project
October 2014
work. Operating costs including fuel and maintenance costs for these units totals
US$251,000 per annum.
Along with site vehicle operating costs, other miscellaneous cost allowances have been
included, totalling US$301,500, specifically:
•
General equipment hire, (US$50k),
•
Outside metallurgical test work costs (US$50k),
•
Outside environmental test work or studies (US$50k),
•
General consulting expenses (US$50k),
•
General cleaning expenses (US$12k),
•
LGAS tank rentals (US$20k), and
•
Safety equipment rentals (US$69.5K).
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 101 of 120
Technical Report on the Nyngan Scandium Project
October 2014
22 Economic Analysis
This PEA is preliminary in nature and should not be considered to be
a pre-feasibility or feasibility study, as the economics and technical
viability of the Project have not been demonstrated at this time. While
this PEA does not consider or include any Inferred Mineral Resources,
and includes only Measured and Indicated Resources, it remains a
preliminary analysis that is not sufficient to enable Project Resources
to be categorized as Mineral Reserves. Furthermore, there is no
certainty that the PEA will be realized.
The economic performance of the project, as outlined in this PEA, has been valued using a
constant dollar cash flow forecast, based on predicted revenue, costs and capital
requirements. The cash flow stream has been discounted by various discount rates to
generate Net Present Values (“NPV’s”) for a 21 year project plan, including an initial
construction year. Both pre-tax and after-tax NPV results are presented, at various discount
rates. Discounted cash flow-internal rate of return (“DCF-IRR” or “IRR”) results are also
presented, only on an after-tax basis. The effects of changes in key inputs has also been
assessed and presented in a sensitivities review.
This PEA considered only one flow sheet design, so results are not included for any
alternative process designs. Other designs have been previously considered, but financial
results for those alternate cases have been done for management, and are not public.
Certain financial aspects of those non-public engineered designs have contributed to this
PEA, and where absorbed, have become part of the flow sheet and project economics. This
PEA does combine the best currently known options for process design and project
development, as supported by completed test work.
22.1 Cash Flow Model – Financial Summary
The project exhibits strong financial returns from initial capital investment of US$77.4 million,
with the direct mechanical items sourced in either US dollars (US$), Euros (€) or Australian
Dollars (A$), and all local erection, installation and infrastructure sourced in Australian
dollars (A$). All project revenues, capital costs, operating costs, and financial returns have
been converted to US$, and presented in this PEA in US$, unless otherwise noted.
Project after-tax NPV (10% discount rate) is US$175.6 million, generating an IRR of 40.6%
and a 2.5 year payback on invested cash flow. Project investment spending to date, and
through to construction, is considered sunk cost and is not included in the cash flow or part
of the financial returns.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 102 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Investment (construction) is planned for 2016, which is year 1 of the cash flow model,
followed by initial full year production in 2017, which is the first of 20 years of production at
the rate of 35,975 kg of scandium oxide product per year, terminating in 2035.
Financial returns from the economic model are shown in Table 22.1.
This PEA is preliminary in nature and should not be considered to be
a pre-feasibility or feasibility study, as the economics and technical
viability of the Project have not been demonstrated at this time.
Table 22.1 Project Financial Returns Summary
Nyngan Scandium Project
2014 PEA
Financial Returns Summary
Pre-Tax
Economic
Return
After-Tax
Economic
Return
Constant Dollar
Net Present Value (US$ M)
6% Discount
8% Discount
10% Discount
$402.6
$327.1
$268.5
$272.2
$217.8
$175.6
Internal Rate of Return (IRR)
56.1%
40.6%
Payback (Years)
1.8
2.5
NOTE: Based on a scandium oxide selling price of US$ 2,000/kg Sc2O3
22.2 Capital Cost Summary
The overall initial capital cost for the project is US$77.4 million. The financial model includes
a construction and commissioning year capital cost outflow of US$74.4 million to initiate
production, plus US$3 million in working capital in the first year of operations, and an
additional US$ 2 million per year (US$ 38M over project term) in sustaining capital over the
20-year project operating life.
The capital cost is spread over a number of areas, but the high pressure autoclave systems
(HPAL), leaching and neutralization circuits, boiler and utilities, and tailings/settling ponds
systems are the most significant capital items. While some of the circuits have been vendorbid as modular, pre-assembled units, the Engineering, Procurement, Construction &
Management (“EPCM”) cost factor was left at 18%, recognizing the cost of integrating a
number of process steps. EPCM costs and contingency allowances total US$21M or 28% of
total costs (excluding working capital allowance). Details of the elements of capital are
presented in Table 22.2.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 103 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 22.2 Nyngan Capital Cost Summary
Nyngan Project
Capital Cost Summary
(US$)
NI 43-101 PEA Result
CapEx/Annual
Capital
kg Oxide
Cost (US$ M)
Pre-Stripping Cost
$1.6
n/a
Mining Equipment
Mine Vehicles/Site Equipment
contractor
$0.4
$10
Processing Plant Equipment
Plant Feed Preparation
HPAL
CCD, Ph Adjust
Solvent Extraction
Product Precipitation
Tailings
Reagent Storage
Water/Steam/Services
Plant Subtotal
$2.1
$13.7
$5.9
$3.1
$1.3
$1.3
$2.6
$6.6
$36.6
$58
$381
$164
$86
$37
$36
$72
$183
$1,019
Other Site Costs
Freight and First fills
Evaporation Ponds-Tailings Dam
Transformer Farm/Buildings
On/Offsite Utilities Supply
Other Costs Subtotal
$2.1
$6.7
$2.5
$2.2
$13.5
$59
$186
$69
$62
$376
$4.3
$9.1
$11.9
$118
$253
$332
$77.4
$2,151
$38.0
N/A
Owners Costs & Working Cap.
EPCM Costs (18%)
Contingency (20%)
Total Project Capital Cost
Total (20 Year) Sustaining Capital
NOTE: The ratio of initial capital cost to annual scandia production volumes shown in
the table above is intended to demonstrate relative capital investment values to
annual production values, on a per unit (kg scandia) basis. Taken over the full 21
years, the ratio of total capital spend relative to total scandia production is US$156/kg.
22.3 Operating Cost Summary
Annual cash operating costs are mostly incurred in A$, but are shown in the summary table
below in US$, having applied a $0.90 exchange rate to convert local costs. The major
processing cost is acid - both sulfuric (H2SO4), and hydrochloric acid (HCl), followed by labor
costs and other reagents used in the solvent extraction circuits. Transport does contribute to
these costs, as the property is in a rural location, but utilities are accessible and the
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 104 of 120
Technical Report on the Nyngan Scandium Project
October 2014
pressure-based leach (HPAL) system is more efficient on almost all input quantities than
previously considered acid bake systems (atmospheric).
The cash flow inputs reflect the key operating assumptions described in Table 22.3.
Table 22.3 Key Operating Costs Summary
Nyngan Project
OpEx Mine/Process Expense
(US$ millions)
Larpro 2014 PEA Result
Annual
Unit Cost Per
US$ Cost
Resource Tonne
Unit Cost Per
Oxide Kg
Mining Costs
Stripping Cost
Mining Cost
Total Mining Costs
$1.1
$0.3
$1.4
$14.24
$4.49
$18.73
$29.69
$9.37
$39.05
Processing Cost
Labor Cost
Utilities Costs
Gas/Heat Costs
Acid Costs (H2SO4 & HCl)
Lime (neutralizer)
Other Reagents
Lab Costs
Consumables
Total Processing Costs
$3.9
$0.8
$0.6
$8.9
$0.9
$2.6
$0.2
$1.0
$18.9
$51.87
$10.53
$8.08
$118.32
$12.00
$34.92
$2.67
$13.00
$251.39
$108.13
$21.96
$16.84
$245.87
$25.02
$72.80
$5.56
$27.10
$523.28
$0.8
$1.3
$0.6
$10.00
$17.73
$7.37
$20.85
$36.97
$15.37
$22.9
$305.2
$635.53
Marketing & Insurance
Maintenance Spend
Mobile Equipment Cost
Annual Cash Operating Cost
NOTE: The calculated cash cost for scandium oxide of $636/kg, reported in the table above,
contains marketing/insurance costs that are not included in the definition of a C1 (Brook Hunt)
cash cost, A true C1 cash cost estimate for the project, which doesn’t change over the 20 year
period, can be estimated at US$614/kg Sc2O3.
22.4 Project Scope
The cash model is based on a 20-year mine plan to process limonite resources containing
371ppm of scandium. Saprolite resources underlie the limonite, and they tend to hold lower
scandium grades and require different leaching parameters to be effectively processed.
EMC has completed adequate testing to determine that campaign-processing one resource
type at a time, or concurrently through separate process streams, is economically desirable
as to cost and recovery.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 105 of 120
Technical Report on the Nyngan Scandium Project
October 2014
This project size will utilize 1.5 million tonnes of limonite resource out of a total 6.1 million
tonnes of measured and indicated (M&I) limonite resource, at a planned grade of 371ppm,
somewhat higher than the 301ppm average limonite resource (M&I) grade. The higher grade
is achieved by mine location in a higher grade section of the resource. The overall resource
(limonite and saprolite, plus minor amounts of included hematite and bedrock material) totals
12 million tonnes at 261ppm. At the planned initial rate of resource mined and processed,
the current PEA-based project will consume one-eighth of the total M&I resource.
Please refer to Chapters 14-16 for further discussion on the ability of the mine plan to
achieve these higher initial grades. The project plan calls for a 9-month construction program
and commissioning in 2016, followed by full production beginning in first quarter 2017.
22.5 100% Basis Presentation
The Nyngan Project PEA result is presented on a 100% ownership basis, for two reasons:
1. The 100% basis presentation shows the true size of the project, without regard for
ownership, which can change with time and development strategy, and
2. EMC currently controls 100% ownership of the project today, notwithstanding the
reality that full transfer of property and mineral rights from the former owner remains
underway with NSW State agencies.
The Company does have a financial partner (Scandium Investments LLC), currently a lender
at the parent level, and there is an outstanding loan (US$2.5M) between the parties. Upon
completion of certain milestones, the financial partner’s debt is automatically converted to a
20% project level interest in the Nyngan Scandium Project. Those milestones, and that debtto-project equity conversion, is anticipated to be reached sometime in 2015.
The PEA result is also presented on a 100% equity basis. The cash flow model is
constructed with annual revenue and cost inputs, plus scheduled annual capital cost inputs.
The financial return figures assume no debt leverage - all project capital is assumed
provided from equity sources.
Annual cash flows are discounted back to ‘time zero’,
specifically January 1, 2016 (beginning period convention), to arrive at NPV and IRR
calculations.
22.6 Basis of Revenue Estimates
Sales revenues are based on EMC pricing knowledge in the market today, plus independent
spot market pricing, and EMC direct conversations as to offtake and pricing with key
customers. The market for scandium oxide is not developed, or at all transparent. Based on
EMC discussions with customers in both the SOFC and aluminium-scandium master alloy
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 106 of 120
Technical Report on the Nyngan Scandium Project
October 2014
markets, the Report establishes an average long term FOB price for oxide of US$2,000/kg.
This price assumption is supported by a mix of sales volumes, pricing assumptions, and
product quality grades into the two principal perceived markets, utilizing both long term and
spot sales pricing estimates.
22.7 Cost and Product Price Escalation
The cash flow model is a constant dollar model, and no inflation is assumed in costs,
revenues, or margins. NPV discount rates need to be viewed as constant dollar rates as well.
22.8 Currency Exchange Rate Assumptions
The cash flow model is expressed in US dollars (“US$”), and any locally-sourced or
Australian currency-based costs have been converted at an exchange rate of 1 A$ to
$0.90US$. The A$/US$ rate as of the writing of this report is US$0.87.
The Australian dollar has been on a steady weakening trend for approximately two years,
beginning in early 2013, when it fell below parity with the US dollar. The Australian dollar has
historically traded below parity to the US currency, although it has traded above parity for 3
of the past 5 years. The current weakening trend is expected to continue, and the currency
has traded at levels significantly lower than today (October 2014) in the last 10-15 years.
The Nyngan Project has exposure to a change in the A$/US$ relationship, because
operating costs are largely in Australian dollars, while revenues are expected to be
denominated in US dollars, and with international customers. The project requires a 20-year
view on exchange rates. Banks and financial institutions offer forecasts, but they typically
extend only two or three years forward.
22.9 Mine Closure and Salvage Costs
The cash flow model includes US$3M in costs for mine closure, expensed in the final year of
operation, which is 2035. The model does not include any recovery of value for equipment or
facilities in the form of salvage.
The Measured and Indicated scandium resource is considerably larger than the current
project would consume, allowing for either expansions of capacity, extensions of the 20-year
initial time period of operation, or both. One or both of these project extensions is viewed as
more likely, based on markets for product, than a closure of operations in 20 years.
22.10 Taxes and Royalties
The property is burdened by four royalties, each different as to amounts and the
circumstance to which they have been established. Each has been modelled and included in
the cash flow analysis.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 107 of 120
Technical Report on the Nyngan Scandium Project
October 2014
The royalties fall under two categories: NSR’s and NPI’s, defined and detailed as follows:
•
NSR’s – Net Smelter Return Royalties, Levied on Revenue (less freight )
o
Jervois Mining Limited Royalty. 1.7% of actual sales prices on oxide,
subject to a 10 tpy minimum once production commences, and a 12 year
time period to expiry.
o
Lenders Royalty. 0.2% of actual sales prices on oxide, subject to a cap
of US$370,000 total payout, expected to be approximately 2.5 years of
production
•
NPI’s – Net Profit Royalties, levied on Pre-Tax Income
o
Plumbum & Canateal Royalty. 1.5% on actual sales prices, but all costs
of production are allowable deductions, so this is a percentage on
earnings before tax
o
New South Wales Mineral Royalty.
4% on actual sales prices, but
refining, processing, and freight costs are deductable for calculation of
royalty payable.
Australian Federal corporate taxes are currently 30% on pre-tax income generated from
Australia-source business assets and entities, and 30% is the long-term tax rate assumption
applied to the project.
Australia offers attractive research tax credits, referred to as an R&D Tax Concession
Program. These credits are intended to encourage technology application in new businesses,
and EMC anticipates that the Nyngan Project, as the first primary scandium mine/mill in
Australia, would qualify. The new program offers a 45 per cent refundable tax offset
(equivalent to a 150 per cent tax deduction) in advance of production, and a 40 per cent
non-refundable tax offset (equivalent to a 133 per cent tax deduction) after revenues exceed
A$20 million. Foreign R&D spend is also eligible now, so long as it is matched by Australianbased R&D work. The cash flow model assumes A$3 million in eligible benefits will generate
a US$1.35 million credit on company tax payable in the first year of operation, 2017.
Australia levies a Goods and Services Tax (“GST”) on sales of most items. GST has not
been included in the cost of all consumables that make up operating costs, and therefore no
allowance has been made in the cash flow for recovery of the tax, which would otherwise be
recoverable out of corporate taxes or as a direct reimbursement. Export sales of product are
exempt from GST, and no Australian sales of product are assumed in the cash model.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 108 of 120
Technical Report on the Nyngan Scandium Project
October 2014
22.11 Sensitivities to Key Variables
Project economic risks to the base case conventional acid plant development plan were
assessed and can be seen below. The risks were segregated into two categories, as follows:
•
Sensitivity to financial parameters, such as production cost, product pricing, capital
cost, and exchange rate changes, as shown in Table 22.4, and
•
Sensitivity to production and operating parameters, such as mill recoveries, mill
availabilities and resource head grade assumptions, as shown in Table 22.5.
Table 22.4 Sensitivity to Product Price
Project
Financial Sensitivity
to Product Price
Product Price US$/kg)
Constant Dollar (After Tax) Project NPV at
Various Discount Rates and
Oxide Product Prices (US$)
$1,200
$1,500
$3,000
$2,000
$2,500
Constant Dollar
Net Present Value (US$ M)
10% Discount
8% Discount
6% Discount
$30.5
$47.3
$69.1
$85.1
$111.4
$145.5
$175.6
$217.8
$272.2
$267.0
$325.2
$400.1
$357.9
$432.0
$527.7
Internal Rate of Return (IRR)
15.8%
25.9%
40.6%
55.8%
71.0%
Table 22.5 Financial Parameters Sensitivity
Sensitivity to
Financial Parameters
NPV (10%)
($US M)
IRR (%)
PEA RESULT
$175.6
40.6%
Operating Cost Sensitivity
Cost Increase (10%)
Cost Decrease (10%)
$163.9
$187.4
38.6%
42.5%
Price Sensitivity
Lower Realized Product Price (10%)
Higher Realized Product Price (10%)
$139.3
$212.0
34.5%
46.6%
Capital Cost Sensitivity
Higher Capital Cost (10%)
Lower Capital Cost (10%)
$169.6
$181.6
37.0%
44.9%
Fx Sensitivity
US$/A$ @ $1.00
$162.6
38.3%
US$/A$ @ $0.80
$188.7
42.8%
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 109 of 120
Technical Report on the Nyngan Scandium Project
October 2014
Table 22.6 Sensitivity to Operating Parameters
Sensitivity to
Operating Parameters
NPV (10%)
(US$ M)
IRR (%)
PEA RESULT
$175.6
40.6%
Mill Recoveries (84.3%)
Recovery Decrease (75%)
Recovery Increase (90%)
$135.5
$200.2
33.9%
44.6%
Mill Availability (86%)
Availability Decrease (82%)
Availability Increase (90%)
$160.7
$194.7
38.1%
43.7%
Ore Grade Sensitivity (371 ppm)
Lower Plant Feed Grade ( 330 ppm)
Higher Plant Feed Grade (410 ppm)
$135.8
$214.3
33.9%
47.0%
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 110 of 120
Technical Report on the Nyngan Scandium Project
October 2014
23 Adjacent Properties
The area is generally agricultural and as such there are no significant adjacent properties.
EMC Metals has another exploration lease to south of the deposit within trucking distance
known as Honeybugle. This property has also shown scandium enriched laterites but is still
at the early exploration stage.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 111 of 120
Technical Report on the Nyngan Scandium Project
October 2014
24 Other relevant data and information
(No other relevant data and information is attached to this section)
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 112 of 120
Technical Report on the Nyngan Scandium Project
October 2014
25 Interpretation and Conclusions
During the preparation of this report, some of the data from the earlier SNC-Lavalin internal
report has been used. This Technical Report updates the information in that report and
replaces the front end leaching process from an acid bake and water leach to a high
pressure acid leach. In the process, some downstream operational aspects also required
changing. As a result of the change in process, scandium recovery has increased to 84%
from 72% with the new process.
A number of process operations have been included in the process flow sheet, even though
they may not end up being required. They have been included because they can be verified
by test work. These include:
•
Partial neutralization of the leach slurry before solvent extraction, when indications
from published literature and minor extrapolation indicates that solvent extraction into
the primary amine will work be more effective at lower pH and will be more selective
for scandium over iron,
•
Partial neutralization with ammonium hydroxide before scandium precipitation is
detailed in the flow sheet as most of the Hazen Research was conducted using this
approach. Sodium hydroxide is likely to be cheaper and simpler but there is no test
work to support this process route at the current time. The effect of pH range on
scandium oxalate precipitation has not been examined over a wide range of pH
conditions and with different neutralizing agents. It is likely that sodium hydroxide
may be suitable, which would result in the removal of the ammonia destruction
circuit,
•
Recirculation of the loaded strip liquor is employed to increase the scandium tenor
leading to scandium oxalate precipitation. Whilst there is no test work on this process
variant, the Larpro technical team have modelled this in METSIM and believe that the
process extrapolation is valid. It may even have a positive effect on scandium oxalate
purity, which has not been catered for.
The Larpro technical team in development of the HPAL process for scandium leaching are
satisfied that HPAL leaching, followed by solvent extraction with a primary amine and
scandium oxalate precipitation and calcination has been demonstrated by test work and
process modelling to be a possible process flow sheet. Members of the technical team and
Dr. Nigel Ricketts have been involved in other projects where scandium leaching by high
pressure acid leaching has also been demonstrated to be possible.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 113 of 120
Technical Report on the Nyngan Scandium Project
October 2014
The Larpro technical team and experienced estimator have developed a mechanical
equipment list and process engineering variables which have been used to developed a
capital cost estimate consistent with +/- 30% accuracy. They have also developed an even
more rigorous operating cost estimate, with reagent usage data provided by a fully
converged METSIM mathematical model of the proposed process. The accuracy of the
operating cost provided is +/- 25% accuracy.
In development of a capital cost estimate, the technical team have taken into account the
relatively small size of the operation. The ability to develop modules of multiple pieces of
equipment has been utilised, in particular in the feed preparation and solvent extraction
circuits. The use of HDPE site-run piping, the use of pre-made and plastic tanks and
transportable buildings has allowed a reduction in some of the factors used in the estimating
process.
The capital cost and operating cost estimates have been used in a financial model that is
consistent with industry norms. The model includes provisions for considered sustaining
capital costs and owner’s costs. Mining is structured to be contract in nature and mining
costs have not been developed to the same rigorous degree as the other areas. However,
the mining costs are only a small fraction of the operating costs of the project due to the fact
that the mine pits are shallow, it is free-dig material and only limited overburden needs to be
moved.
The economic analysis shows a project that is sufficiently attractive that it should be taken to
higher levels of engineering studies. The key issue though with any scandium project is what
price to use in a market that is likely to change if the Nyngan Scandium Project is built. The
US$2,000/kg figure used is conservative based on current prices. If the increase in supply
created by the Nyngan Scandium Project coming into production creates a reduction in
market price, then the economics of the project should enable it to still remain competitive at
the expense of other smaller, higher cost producers. Market discussions with potential end
users has indicated though that it is highly likely that the presence of a large, reliable
producer in a stable western democracy will enable an increase in scandium use without a
significant price reduction.
Whilst the process design development is well advanced, a number of process alternatives
are under consideration by EMC Metals and metallurgical test work is currently underway. It
is likely that these process improvements will lead to enhanced project economics by:
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 114 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Reducing or eliminating some by-product streams,
•
Reducing capital cost, and
•
Reducing operating costs by using cheaper reagents and less of them.
The infrastructure for the project is excellent and well understood. Plans appear to be in
place to continue with progression of these in the future. Evidence of suitable negotiations
with government agencies and major suppliers was provided to the QP. Both water supply
and electricity supply contracts will need to be finalised. Opportunities exist for negotiation
on LPG gas supply contracts or even replacements with LNG as an alternative.
Resource definition is already at a suitable level for study work. Plans are being made for
further drilling on site, in particular in areas where mining will commence first and this
material will be used in new confirmatory test work. The current process plant design is
suitable for the limonite portion of the resource only. Process variant test work is underway
for utilisation of the saprolite component of the deposit as well.
Product purity should also be a focus of future test work. The current test work results and
METSIM plan allow for minimum product purity of 97.4% Sc2O3, which should be readily
marketable for the aluminium-scandium alloy market as the remaining impurities should not
be an issue for use in aluminium alloys. Product purity will need to be upgraded for use in
ceramic fuel cells and consideration should be given in subsequent phases of work for the
production of a second, high purity stream to produce 99+% purity oxide product. The Hazen
Research test work previously done for EMC has shown potential process solutions, which
can be further investigated and refined.
Additional work is required on tailings settling characteristics related to tailings disposal, and
on the potential for leaching of deleterious elements such as magnesium, manganese and
chromium from the tailings, as part of the EIA activities. The previously completed EIA
activities need to be aligned with the new HPAL process flow sheet.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 115 of 120
Technical Report on the Nyngan Scandium Project
October 2014
26 Recommendations
26.1 Next steps
The project has been shown to have developed a potentially viable process flow sheet and
modelled economic analysis has been shown at the level of a PEA to be attractive. However,
the nature of a PEA is that it is preliminary in nature and should not be considered to be a
pre-feasibility or feasibility study, as the economics and technical viability of the Project have
not been demonstrated at this time. The recommendation is therefore to proceed to the next
stage of study which should be a Preliminary Feasibility Study (PFS). This work should
include:
•
Mining studies, including development of an updated mine plan
•
Process plant engineering
•
Tailings storage facility engineering
•
Hydrology studies
•
Geotechnical studies on both the mine and proposed plant site
•
Finalization of the Environmental Impact Assessment process, including integration
with the process plant engineering design
A number of technical improvements have been noted that should be addressed by test
work before commencing more advanced engineering studies and these are highlighted
below.
Marketing efforts should be continued with the goal of developing an off-take arrangement
for at least part of the product from the plant to provide financiers more surety that the
product produced from the plant will have a ready market at the project price structure.
26.2 Areas Recommended for Technical Improvements
26.2.1 Batch versus continuous autoclaves
The HPAL front-end of the process used in this PEA is designed as a twin-autoclave batch
process. As the filling and emptying time is about the same as the leaching time, effectively
two autoclaves are required where one continuous autoclave of the same size would
achieve the same leaching performance.
The flash vessel arrangement is simplified in the current flow sheet compared to a
continuous autoclave arrangement and the ability to recycle raffinate back to the feed
preparation area is useful. The steam boiler is larger for a batch autoclave system due to
the intermittent steam load requirement.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 116 of 120
Technical Report on the Nyngan Scandium Project
October 2014
It is recommended that an engineering study at better accuracy than +/- 30% be conducted
to determine the relative operating and capital costs of batch versus continuous operation.
The preferred leaching system engineering can then be used within the PFS.
26.2.2 Solvent extraction
Further solvent extraction test work needs to be conducted on solution straight from HPAL
operations without any neutralization, and on alternative amine extractants that may optimize
the altered system. Further work should be considered on optimisation of the modifier to be
used, in particular with respect to phase disengagement times and crud formation utilising an
extended pilot plant operation.
The formulation of the combined acid/chloride strip solution should be investigated in order
to potentially eliminate the use of sodium hydroxide in this area with potential replacement of
hydrochloric acid with common sea salt.
26.2.3 Feed preparation
The laterite feed contains clay and if it gets wet, nickel laterite processing plant experience
shows that it can be difficult to handle. Some test work on materials handling characteristics
for Nyngan laterite is appropriate before final feed handling equipment is specified. An
alternative to using raffinate for feed preparation would result in lower materials
requirements for the feed preparation circuit and the ability to use steel rather than ceramic
grinding media. The use of raw water for feed preparation, followed by filtration of the solids
and re-pulping in raffinate may achieve the desired goals of raffinate recycle but with
improvements in capital cost and reduced operational corrosion issues.
26.2.4 HPAL Leaching
Further work in HPAL leaching is required to test a number of parameters which have design
implications for equipment selection:
•
Further test work on the optimum slurry density in the autoclaves
•
The influence of chloride ion concentration on leaching performance and downstream
settling characteristics
•
The effect of particle size on leaching performance,
•
Consideration of the use of direct addition of sulfur-bearing minerals in a brick-lined
continuous autoclave to provide most of the acid/heat requirement.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 117 of 120
Technical Report on the Nyngan Scandium Project
October 2014
26.2.5 Slurry rheology
The presence of clays and fine limonite in the feed to the autoclaves is likely to produce
viscous solutions. Consideration should be given to slurry viscosity measurement when
future test work solutions are produced so that pump and thickener sizing are more accurate.
26.2.6 Tailings
While the tailings storage facility is relatively small, the tailings dam design will still need to
be engineered. This activity should include test work on settled density as well as
investigation of local rock materials for construction of the tailings dam walls.
26.2.7 Scandium oxalate precipitation
Scandium oxalate precipitation test work should be conducted at a range of pH values with a
range of neutralizing agents to determine the following:
•
Optimum pH range for scandium recovery, crystal particle size and product purity
•
The effect of various neutralizing agents on scandium recovery, crystal particle size
and product purity
•
The effect of temperature and potentially a temperature gradient across the
precipitation vessels on scandium recovery, crystal particle size and product purity
It is likely that some or all of the above factors could contribute to lower oxalic acid use and
higher product purity. The elimination of ammonium hydroxide as a neutralizing agent would
have a significant benefit to operating cost and a reduction in effluent required to be added
to the evaporation pond.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 118 of 120
Technical Report on the Nyngan Scandium Project
October 2014
27 References
The information contained in this Technical Reports sections was obtained from:
•
NSW Government Data Systems (Minview and DIGS)
•
http://imagery.maps.nsw.gov.au
•
http://www.weatherzone.com.au
•
http://www.minerals.nsw.gov.au/tasmap/jsp/Viewer.jsp?cmd=login
•
Department of Lands, Dubbo Office, Contact: Craig Ferguson
•
http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0,
•
Bogan Shire Council, Nyngan, Contact: Josh Loxley, Google Earth,
•
Manager Engineering Services, Bogan Shire Council, Nyngan, Contact: Keith Dawe
Various online technical reports from previous and current license holders:
•
Anaconda Australia Limited (2001) Final report EL 76 1967 Nyngan area
•
Anaconda (NSW) Pty Ltd (2002) First to the Third (and final) Annual reports EL 5589
Nyngan area.
•
Bogan Shire Council (2001-02) ‘State of the Environment’ Report.
•
Douglas McKenna and Partners (2005) Review of Environmental Factors for
Proposed Aircore Drilling to define a trial pit at Gilgai NSW for Jervois Mining Limited.
•
Douglas McKenna and Partners (2006) Report on Gilgai Scandium Project and
Resource Calculations EL 6009 Nyngan NSW for Jervois Mining Limited Volumes 1
to 3.
•
Douglas McKenna and Partners (2006) Nyngan EL 6009 Composite Sample
•
Collection of Gilgai Limonite Resource.
•
Fogarty JM and Thomson AB (2005) Girilambone and Girilambone north Copper
Deposits, NSW.
•
Lachlan Resources NL and Platinum Search NL (1988-1990) Exploration Reports on
EL 2965 Nyngan/Miandetta area.
•
Platsearch NL (2001) First to the Seventh (and final) Annual Exploration Reports EL
4756 Cobar Area.
•
Recovery of Scandium from Gilgai Laterite Ores by Acid Baking, Water Leaching,
Solvent Extraction and Precipitation, CSIRO Report DMR-3770, March 2010.
•
Pilot Study for the Recovery of Scandium from Laterite Ore, Hazen Research Inc.,
June 15, 2011, Hazen Project No. 11129-01.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 119 of 120
Technical Report on the Nyngan Scandium Project
October 2014
•
Pilot Solvent Extraction Study for the Recovery of Scandium from Laterite Ore Leach
Liquor, Hazen Research Inc, June 30, 2011, Hazen Project No. 11129-01.
•
Laboratory Study for the Recovery of Scandium from Laterite Ore, Hazen Research
Inc, December 10, 2010, Hazen Project No. 11129.
•
Project Update on Scandium Purification, E-mail Delivery Hazen Research Inc,
Nicholas Dummer / Richard Houston to Mr Willem Duyvesteyn, July 1, 2011, Hazen
Project No. 11129-01.
•
Additional Laboratory Studies for the Recovery of Scandium from Laterite Ore,
Hazen Research communication to W. Duyvesteyn, 23 November 2011.
•
Purification of Scandium Extracted from Laterite Ore, Revision 1, 25 January 2012,
Hazen Report No. 11129-01. (Limited inclusion by SNC-Lavalin).
•
Roberts & Schaefer Pre-Feasibility Study “Scandium Recovery from Gilgai Laterite
Ores by Acid Curing, Baking, Leaching, Solvent Extraction and Precipitation”, July
2010, Project No. 3001.
•
SNC-Lavalin Nyngan Scandium Project Study Report, 140101-0000-30RF-0001,
February, 2012
•
R.W. Corkery Report: Conceptual Project Development Plan, December 2011
reference No. 773/04.
•
NI 43-101 Technical Report on The Nyngan Gilgai Scandium Project, Jervois Mining
Limited, Nyngan, New South Wales, Australia. (Report Date: 25th March 2010).
•
An Investigation into Leaching and Recovery of Scandium from Australian Laterite
Samples, SGS Canada Inc. Report, 13261-001 Final Report, January 19, 2012.
•
Hydrometallurgical
(HPAL)
Processing
of
Scandium-Bearing
Australian
Limonite/Saprolite Ore Samples, SGS Canada Inc., 13261-002 Final Report, June
14, 2013.
•
Nyngan Scandium Polygonal Resource and Pit Optimization, Mining One
Consultants, Report 1675_M/3008, February 23, 2012.
NI 43-101 F1 Technical Report on the Nyngan Scandium Project
Page 120 of 120