Cap-Ex Releases Positive Preliminary Economic Assessment
June 27 2013 - 5:00AM
Marketwired Canada
Cap-Ex Iron Ore Ltd (TSX VENTURE:CEV) (FRANKFURT:X0V) (OTCQX:CPXVF) ("Cap-Ex" or
the "Company") is pleased to announce that it has received the results of the
Preliminary Economic Assessment ("PEA") on the Block 103 Property in western
Labrador. The PEA was completed by BBA Inc. ("BBA") located in Montreal, Quebec,
and is effective as of June 27, 2013. The complete NI 43-101 Technical Report
will be filed on SEDAR and the Cap-Ex website within 45 days of this news
release.
Cap-Ex has a current Inferred iron ore resource of 7.8 billion tonnes at 29%
total iron ("TFe") and 18.4% magnetic iron ("magFe"). The PEA was based on only
the first thirty years of production, which will require the processing of only
1.9 billion tonnes at 28.8% TFe and 18.6% magFe. The mineral resource estimate
is based on a cut-off grade ("COG") of 10% magFe.
Highlights of the PEA Study include:
-- Initial Capital disbursement of CAD$4.185 billion for the construction
(leading to the start-up) of the first production line and required
infrastructure and Total Capital costs of CAD$5.979 billion for the
construction of the two production lines. This includes CAD$2.275
billion for the Pellet Plant and excludes closure costs, sustaining
capital and leased equipment and facilities.
-- Commercial production for the first line commencing in 2018 and the
second line commencing in 2019.
-- Pellet production rate of 16.6 million tonnes per year of superior
quality acid pellets from two production lines at a grade of 67.0% iron.
-- Pre-tax IRR of 19.3%.
-- NPV (discounted at 8%) of CAD$7.383 billion.
-- Payback period of 7.0 years.
-- Total Operating Costs (excluding royalties) of CAD$62.87 per pellet
tonne freight on board at Port of Sept-Iles (averaged over the first
thirty years of production).
-- Assumes use of existing railway infrastructure, hydropower availability
from Nalcor and current Port of Sept-Iles expansion infrastructure for
shiploading services.
"We are exceptionally pleased with the results of our PEA, especially since we
are basing it on only 25% of our currently defined mineral resource estimate,"
says Graham Harris, CEO of Cap-Ex. "We are now able to continue developing the
Block 103 Property and further our discussions with potential strategic
partners."
The PEA is preliminary in nature and includes Inferred mineral resources that
are considered too speculative geologically to have economic considerations
applied to them that would enable them to be categorized as mineral reserves.
There is no certainty that the conclusions reached in the PEA will be realized.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
Financial Analysis
Based on assumptions that commercial production would begin in Q1 2018 and would
continue for 30 years, the following results were obtained:
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Table 1 : Financial Analysis
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IRR = 19.3% NPV (B$CAD)
(Pre-tax) Payback (yrs.)
----------------------
Discount Rate
------------------------------------------------------------------
0% 32.807 5.3
------------------------------------------------------------------
5% 12.754 6.2
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8% 7.383 7.0
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10% 5.067 7.4
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The capital disbursement required to bring the first line into production is
estimated at CAD$4.185. The total capital expenditure (including contingency)
for the two production lines is estimated at CAD$5.979 billion. The capital
costs estimate excludes closure costs and sustaining capital, which are expected
to be in the order of CAD$80 million and CAD$818.4 million respectively over the
first thirty years of operation.
--------------------------------------------------------------------
Table 2: Capital Costs (CAD$ Million)
--------------------------------------------------------------------
Mining (Capitalized Pre-Stripping) 35.7
--------------------------------------------------------------------
Concentrator and Block 103 Site Infrastructure 3,613.8
--------------------------------------------------------------------
Pellet Plant 2,274.9
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Block 103 Site Rail Line 54.5
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TOTAL 5,979
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Operating costs, including annual costs for leasing of equipment and facilities
(valued at CAD$424.9 million, including interest, over the life of the leases),
are estimated at CAD$62.87 per pellet tonne, averaged over the first thirty
years of operation.
------------------------------------------------------------------
Table 3: Estimated Average Operating Costs (First 30 yrs.)
------------------------------------------------------------------
CAD$/Pellet Tonne
------------------------------------------------------------------
Mining 11.59
------------------------------------------------------------------
Concentrator 11.09
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Pelletizing 14.44
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General Block 103 Site 0.56
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General Administration 1.82
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Environmental and Tailings Management 2.00
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Rail Transportation 16.68
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Storage and Shiploading Services 3.82
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Railcar and Mining Equipment Leases 0.87
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------------------------------------------------------------------
TOTAL 62.87
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The PEA assumes an exchange rate of CAD$1 = US$1 and a constant pellet selling
price over the first thirty years of operation of CAD$145 per tonne, based on
Platts benchmark price for 62% Fe concentrate of $110 per tonne. The financial
analysis also includes applicable royalties payable to 743584 Ontario Inc. and
Adriana Resources Inc.
Metallurgical testing results indicate production of superior quality iron
pellets, produced with projected concentrate chemical analysis of:
----------------------------------------------------------------------------
Fe SiO2 Al2O3 MgO CaO Na2O K2O Ti Mn P Cr S
----------------------------------------------------------------------------
less
than
69.5% 3.36% 0.08% 0.10% 0.11% 0.07% 0.01% 0.02% 0.046% 0.006% 0.020% 0.015 %
----------------------------------------------------------------------------
Pellet analysis was projected at 67.0% Fe and 3.5% SiO2 .
Project Summary
The Block 103 Property is located in western Labrador and is approximately 30 km
northwest from the town of Schefferville, Quebec. The Property consists of 14
contiguous map-staked licenses totalling 831 mineral claims of 20,775 ha. It is
centred at approximately 54 degrees 58'N latitude and 67 degrees 14'W longitude.
The proposed project at the Block 103 site, as stated in the PEA, includes the
following components:
-- The Block 103 ore deposit and waste disposal areas;
-- Processing infrastructure including crushers, grinding and screening,
magnetic concentration, pellet plant and tailings dewatering and
pumping;
-- The tailings management facility and water management installations;
-- Ancillary infrastructure to support the mine and processing plant
including mine equipment maintenance shop and wash bay, warehouse,
offices, employee facilities, pumphouses, electrical substation,
conveyors, load-out system, stockpiles, etc.;
-- A 450-bed permanent camp;
-- A rail loop, service track and railway connecting to a planned, new rail
system (which in turn connects to the Tshiuetin Rail Transport system)
that will be used by New Millennium.
A preliminary site plan for the Block 103 Property, as prepared by BBA, can be
viewed at: http://www.cap-ex.ca/images/maps/Block103SitePlan.pdf
The following assumptions were also made for the PEA:
-- Rail transportation will be provided by Tshiuetin Rail Transport (TRT)
railway in Schefferville, Quebec, Quebec North Shore and Labrador
(QNS&L) railway and the Chemin de Fer Arnaud (CFA), using existing
infrastructure and leading to the Port of Sept-Iles at Pointe-Noire,
Quebec.
-- Cap-Ex will not build any port terminal facilities, however, will pay a
fee and share facilities to be built by others.
-- Shiploading services will be provided by the Port of Sept-Iles using the
common deepwater shiploading facility currently being built.
Technical Report
An NI 43-101 Technical Report will be filed on SEDAR and on the Cap-Ex website
within 45 days of the date of this news release. The report will present a
summary of the Preliminary Economic Analysis. The report is being prepared under
the supervision of Mr. Angelo Grandillo, P.Eng, of BBA, a Qualified Person as
defined by NI 43-101, with contributions from Watts, Griffis and McOuat Ltd.
Qualified Person
The PEA was prepared under the supervision of Mr. Angelo Grandillo, P.Eng, with
BBA. Mr. Grandillo is a Qualified Person as defined by NI 43-101 and independent
of Cap-Ex. Mr. Grandillo has reviewed and verified the technical information
contained in this news release.
Additional information about the Cap-Ex Block 103 Project can be found in the
technical report filed on SEDAR at www.sedar.com entitled "Technical Report and
Mineral Resource Estimate on the Greenbush Zone, Block 103 Property,
Newfoundland and Labrador for Cap-Ex Iron Ore Ltd." dated March 21, 2013.
About Cap-Ex Iron Ore Ltd.
Cap-Ex Iron Ore Ltd. is a Canadian listed company, focused on the development of
its wholly owned Block 103 Iron Ore Project in the Labrador Trough, near the
mining town of Schefferville, Quebec. The Block 103 property is strategically
located close to an existing railway that can provide a direct link to a
shipping port and is adjacent to Tata Steel-New Millenium Iron Corp. LabMag and
KeMag deposits and the Tata-New Millennium oxide deposits to the east.
For additional information please visit the Company's website at www.cap-ex.ca.
CAP-EX IRON ORE LTD.
On behalf of the Board
Graham Harris, CEO and Director
Cautionary Note Regarding Forward-looking Information
This press release contains "forward-looking information" within the meaning of
applicable Canadian securities legislation. Forward-looking information
includes, but is not limited to, statements with respect to the development
potential of the Company's Block 103 iron ore property, future exploration
plans, future production, future operating and capital costs, the projected IRR,
NPV and payback period, details about infrastructure and the expected timing for
completion of a feasibility study. Generally, forward-looking information can be
identified by the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or "believes",
or variations of such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken", "occur" or "be
achieved". Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be materially different
from those expressed or implied by such forward-looking information. There can
be no assurance that such information will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking information. The Company does not undertake to update any
forward-looking information, except in accordance with applicable securities
laws.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM
IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY
FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations:
604-669-2279
info@cap-ex.ca
www.cap-ex.ca
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