Location and Infrastructure
Foran’s 20,382 hectare McIlvenna Bay Property is located in east-central Saskatchewan, approximately 65 km west of Flin Flon, Manitoba (85 km by road). The property is contiguous with Foran's Hanson Lake and Balsam Properties.
The McIlvenna Bay deposit and Foran's exploration camp are road-accessible, located 85 km west of Flin Flon via Provincial Highway 106 and 17 km south on the Hanson Lake all-weather gravel road. Power lines run the length of the Hanson Lake gravel road to the McIlvenna Bay deposit.
The mining town of Flin Flon (pop. 5,600), is the largest commercial/residential centre in the area and a railhead on the Hudson Bay railway. The Flin Flon airport has regular commercial air service to Winnipeg.
Foran owns a 100% interest in the McIlvenna Bay Property, subject to a 1% NSR held by Cameco Corporation and BHP Billiton. The NSR has a buy-out provision in favour of Foran for $1,000,000 at any time. Some of the claims that make up the McIlvenna Bay Property are subject to a $0.75/tonne of ore extracted Net Tonnage Royalty, with a right of first refusal in favour of Foran.
History and Past Work
The McIlvenna Bay deposit was discovered in early 1988 during a drill program by a Saskatchewan Mining Development Corporation ("SMDC"; subsequently Cameco Corporation) and Esso Minerals joint venture, following up on a Barringer/Questor Mark VI helicopter INPUT survey which delineated a 1.2 kilometre long anomaly south of Hanson Lake. In addition to its proximity to several VMS deposits in the established Flin Flon mining camp, several VMS occurrences were known in the immediate McIlvenna Bay area. These include the past-producing high-grade Hanson Lake Mine and the Balsam deposit, where past operators outlined an historic mineral resource*.
* The Balsam mineral resource is historic and the Company is not treating it as current; Foran has not done sufficient work to classify it as a current resource estimate. A program of drill hole re-surveying, re-logging and drill core QAQC is required to qualify the historic resource and identify areas for expansion through exploration drilling.
In 1991 Cameco suspended exploration of the McIlvenna Bay deposit, which remained dormant until optioned by Foran in 1998. Foran completed several additional drill programs between 1998 and 2000. Following a period of inactivity and the appointment of a new management team in late 2010 - early 2011, Foran completed several drill campaigns between early 2011 and 2014.
The following table summarizes diamond drilling at McIlvenna Bay from discovery of the deposit in 1988 to completion of the Winter 2013 Drill Program:
Year Company Number of Holes Meters Drilled 1988 Cameco/Esso/TriGold 26 7,702 1989 Cameco/TriMin 30 14,565 1990 Cameco/Billiton 13 7,869 1998 Foran 3 978 1999 Foran 62 28,993 2000 Foran 3 2,938 2007/08 Foran 7 6,525 2011 Foran 28 13,214 2012 Foran 15 3,825 2013 Foran 4 2,243 Total: 191 88,681
An increased mineral resource estimate for the McIlvenna Bay deposit was announced on March 27, 2013.
A positive preliminary economic assessment (PEA) for the McIlvenna Bay deposit was released on November 12, 2014.
The McIlvenna Bay deposit is located on the western edge of the Paleoproterozoic Flin Flon Greenstone Belt (FFGB) which extends from north central Manitoba into northeastern Saskatchewan. The FFGB forms part of the Reindeer Zone, a subdivision of the Trans-Hudson Orogen, a continental-scale tectonic event which occurred approximately between 1.84 Ga and 1.80 Ga as a result of the collision between the Superior and Hearne Archean Cratons.
The Hanson Lake Block, the host terrain of the McIlvenna Bay deposit, is bound to the east by the Sturgeon-Weir Shear Zone and to the west by the Tabbernor Fault Zone. This supracrustal block extends to the south beneath flat lying cover of Ordovician sandstones of the Winnipeg Formation and dolomites of the Red River Formation. To the north, the block is bound by the Kisseynew Domain, a gneissic metasedimentary belt and the Attitti Complex.
In the Hanson Lake area, north of the Paleozoic unconformity, exposed Proterozoic rocks of the Hanson Lake Block are dominated by juvenile island arc, felsic to intermediate metavolcanic rocks, with subordinate amounts of mafic volcanics and sedimentary rocks. Oxide facies iron formations have been identified by diamond drilling and are readily identified in airborne magnetic data. The sequence has been intruded by various felsic intrusions, some of which are believed to be subvolcanic. Abundant diorite and gabbro plugs and dykes cut the sequence, as well as minor ultramafic intrusions. Supracrustal rocks in the Hanson Lake area are northerly trending, upright and east-facing.
The stratigraphy of the deposit area, divided into six formations, has been defined over a 2 km strike length by a total of 191 drill holes. The lowest formation intersected by drilling both structurally and stratigraphically is the McIlvenna Bay Formation, which consists of variably altered felsic volcanic and volcaniclastic units. The formation is at least 200m thick (the limit of current drilling) and is the host to both the massive and semi-massive sulphide horizons and underlying stockwork zones that make up the McIlvenna Bay deposit. The McIlvenna Bay Formation is overlain to the north by the Cap Tuffite Formation, a sequence of intercalated felsic volcanics and cherty metasediments which ranges from 35-55m in true thickness and forms a cap to the sulphide deposits. Overlying the Cap Tuffite Formation is the Koziol Iron Formation, an oxide-facies iron formation up to 25m in true thickness which forms a long and distinctive marker horizon traceable for several kilometres along strike by drilling and geophysics. Topping the Koziol Iron Formation is the Rusk Formation, a thick package of carbonate altered mafic volcanics rocks, up to 100m in true thickness. The Rusk Formation is in turn overlain by the thin HW-A Formation, an exhalative oxide-sulphide facies iron formation that locally transitions laterally into pyrite-pyrrhotite-sphalerite bearing massive sulphide. This unit ranges from 1cm to about 5m in true thickness. Capping the HW-A Formation is a thick unsorted bimodal package of mafic and felsic volcanics, mafic intrusions, minor sediments and iron formations tentatively called the Upper Sequence. The stratigraphic package has been cut by several different intrusions, the most significant of which is the Davies Gabbro, a series of sill-like bodies which intrude the Cap Tuffite Formation. The basement geology is unconformably overlain by the flat lying to shallowly south-dipping Ordovician dolomites and sandstones of the Red River and Winnipeg Formations which have a combined total thickness between 20 and 30m.
Stratigraphy in the deposit area strikes between 275° and 295° and dips to the north at 65° to 70°, although in selected areas it dips vertically. The deposit has the same orientation as the stratigraphy and plunges at approximately 45° to the northwest. Rocks in the host stratigraphy are massive to strongly foliated, the intensity of which depends on the competency of each individual unit and the degree of alteration. Rocks are variably altered to sericite and chlorite throughout the deposit area and have been subjected to greenschist facies regional metamorphism.
Two phases of folding of the host stratigraphy have been observed in the drill core and are believed to correspond to the regional D2 and D3 deformational events. An early tight to isoclinal fold event (regional D2/F2) was responsible for the development of the dominant observed structural fabric, a foliation oriented at approximately 280°/65°, and resulted in the transposition of bedding into the plane of the foliation (making the foliation sub-parallel to stratigraphy). Isolated isoclinal fold hinges in iron formation units have been observed in several drill holes that have a plunge that is estimated to be approximately 45° to the west or west-north-west. This plunge is roughly parallel to the plunge of the deposit and indicates that the D2 deformational event was likely responsible for the current geometry of the deposit. A strong crenulation (regional D3/F3 event) of the foliation is developed in portions of the footwall alteration zone. The plunge of the crenulation is much flatter, usually less than 25° and trends either northwest or northeast.
Mineralization and Mineral Resources
McIlvenna Bay is a volcanogenic massive sulphide (VMS) deposit, of a type commonly found in Canada in Precambrian through Mesozoic volcano-sedimentary greenstone belts occupying extensional arc environments such as a rifts or calderas. They are typified by synvolcanic accumulations of sulphide minerals in geological environments characterized by submarine volcanic rocks.
VMS deposits are exhalative deposits, formed through the focused discharge of hot, metal-rich hydrothermal fluids. These deposits commonly occur in clusters which, when developed constitute localized mining districts or VMS camps. A single deposit or mine may consist of several individual massive sulphide lenses and their underlying stockwork zones. It is thought that the stockwork zone represents the near-surface channel ways of a submarine hydrothermal system and the massive sulphide lens represents the accumulation of sulphides precipitated from the hydrothermal solutions, on or near the sea floor, in close proximity to the discharge vent.
McIlvenna Bay comprises five different zones of mineralization that are mineralogically and/or texturally distinct: Zone 2 (L2MS), the Upper West Zone (UWZ), Zone 3 (L3MS), and two Copper Stockwork Zones (CSZ). These zones are made up of three distinct styles of mineralization: massive sulphides, semi-massive sulphides, and stockwork.
The bulk of the massive sulphide mineralization in the deposit is contained in one continuous sheet (Main Zone) which has been divided into two separate zones based on mineralogy: Zone 2 (L2MS) and the Upper West Zone (UWZ). The UWZ consists of a copper–zinc-gold-enriched massive to semi-massive sulphide unit which has a strike length of 150m to 300m, varies from 2.80m to 10.60m in true thickness with an average of 4.81m. The UWZ transitions down dip into a more zinc-silver-rich massive sulphide termed Zone 2, which has a strike length of 400m to 550m, ranges in true thickness from 0.40m to 16.75m and averages 5.55m. Both zones have been defined by drilling over a plunge length of 1,900m and remain open at depth for further expansion.
Underlying and in contact with the massive sulphide horizon is the Copper Stockwork Zone (CSZ). The CSZ consists of stockwork-style copper mineralization associated with strong chlorite alteration and is thought to represent the feeder system to the massive sulphides above. The zone is copper-gold-rich, has a strike length of 300m to 600m, ranges between 0.60m and 48.30m in true thickness, averages 8.08m and has a similar plunge length as the massive sulphides above. A second small stockwork zone termed the Copper Stockwork Footwall Zone, occurs locally below the main CSZ in several drill holes. Zone 3 (L3MS) represents a smaller discontinuous, massive to semi-massive sulphide lens (with local associated stockwork zones) that occurs 10m to 30m above the UWZ and L2MS horizon.
McIlvenna Bay Mineral Resource Estimate (January 2013)
Indicated Zone Tonnes (kt) Cu (%) Zn (%) Au (g/t) Ag (g/t) CuEq (%) ZnEq (%) Cu (Mlb) Zn (Mlb) Au (Koz) Ag (Koz) L2MS 3,390 0.31 7.15 0.24 23.7 1.51 10.19 23.0 534 25.7 2,580.0 UW-MS 2,150 1.66 4.10 0.88 30.7 2.79 18.75 78.7 194 61.0 2,120.0 L3MS 760 1.23 2.55 0.30 14.5 1.79 12.03 20.5 42.4 7.3 353.0 CSZ 7,610 1.60 0.28 0.51 10.6 1.94 13.07 269.0 46.5 126.0 2,600.0 Total 13,900 1.28 2.67 0.49 17.1 1.96 13.20 391 817 220.0 7,650.0 Inferred L2MS 2,800 0.50 7.13 0.38 26.1 1.79 12.04 31.1 439 33.8 2,350.0 UW-MS 2,910 1.62 3.68 0.51 19.0 2.47 16.62 104.3 236 47.8 1,780.0 L3MS 124 1.61 2.67 0.51 17.7 2.31 15.52 4.4 7 2.04 70.3 CSZ 5,480 1.56 0.47 0.42 12.1 1.87 12.59 188.0 57 73.1 2,140.0 Total 11,300 1.32 2.97 0.43 17.5 2.01 13.54 328 740 157.0 6,340.0
The Mineral Resource estimate was carried out in 2013 by David Rennie, P. Eng., of RPA Inc.
- CIM definitions were followed for Mineral Resources
- Mineral Resources are estimated at a cut-off of US$60/t.
- CuEq and ZnEq grades, were calculated as per the description in this report and include provisions for metallurgical recovery.
- Metal prices used for this estimate were US$3.25/lb Cu, US$1.10/lb Zn, US$1,400/oz Au, and US$25/oz Ag.
- High-grade caps were applied as per the text of this report.
- Specific gravity was estimated for each block based on measurements taken from core specimens.
- CSZ includes the Copper Stockwork Footwall Zone.
Scoping level metallurgical test work was conducted on composite samples from Zone 2 (L2MS), the Upper West Zone (UW-MS) and the Copper Stockwork Zone (CSZ) in 2011. Samples were found to be amenable to conventional grinding and floatation. This work demonstrated the potential to produce saleable high grade copper and zinc concentrates at McIlvenna Bay.
Due to the differences in the mineralogy of the zones, a variety of concentrates were produced by the testwork as detailed in the table below. The copper-rich CSZ produces a high grade copper concentrate (Cu Con#1), the UWZ has a mixed mineralogy and produces both a copper concentrate (Cu Con#2) as well as a zinc concentrate (Zn Con#2) and Zone 2 produces a good zinc concentrate (Zn Con#1) along with a ‘bulk concentrate’ which contains the other minor elements (Cu-Pb) included in the lens.
McIlvenna Bay Metallurgical Results
Zone Copper Concentrates Zinc Concentrates Copper Stockwork Zone
Composite Head Grade:
1.45% Cu, 0.34 g/t Au, 8 g/t Ag
Cu Conc. #1
Grade: 29% Cu, 6.4g/t Au, 126g/t Ag
94% Cu, 85% Au, 77% Ag
N/A Main Lens:
Upper West Zone
Composite Head Grade:
3.97% Zn, 1.61% Cu, 0.55 g/t Au, 25 g/t Ag
Cu Conc. #2
24% Cu, 6.5g/t Au, 216g/t Ag
84% Cu, 60% Au, 50% Ag
Zn Conc. #2
Grade: 54% Zn
Recovery: 76% Zn
Composite Head Grade:
7.25% Zn, 0.30% Cu, 0.19 g/t Au, 16 g/t Ag
Bulk Cu-Pb Conc.
(minor: <1% of revenue)
12% Cu, 14% Pb, 5.3g/t Au, 332g/t Ag
Recoveries: 56% Cu, 59% Pb, 42% Au, 33% Ag
Zn Conc. #1
Grade: 55% Zn
Recovery: 85% Zn
Testwork conducted by G&T Metallurgical (Stewart Group)
Preliminary Economic Assessment
On November 12, 2014 Foran announced the results of a positive Preliminary Economic Assessment (PEA) for McIlvenna Bay. Highlights of the PEA include:
- Estimated pre-tax NPV7% of $382M ($263M after-tax) & 22% IRR (19% after-tax)
- The PEA contemplates a 5,000 tonne per day underground mine and concentrator with a 14 year mine life; estimated costs and design are in-line with existing mining operations in the region
- The deposit is open to depth, with potential to increase mine life
- Pre-production CapEx of $249M & sustaining capital of $150M (including a 20% contingency)
- Average annual production of 58.9 Mlbs of payable zinc, 37.6 Mlbs of payable copper, 16,000 ounces of payable gold and 398,000 ounces of payable silver at a cash cost of production (net of by-product credits) of $(0.37) per pound of zinc, or $0.84 per pound of copper
- Estimated costs and design are in-line with existing mining operations in the region
- For the purposes of the PEA, zinc and copper concentrates are not assumed to be transported to the nearest smelters, but to a North American smelter for zinc and an Asian smelter for copper
McIlvenna Bay PEA Summary
Pre-Tax Post-Tax NPV7% $382M $263M IRR 22% 19% Payback 4.1 years 4.1 years Mine Life 14 years Plant Throughput 5,000 tpd CapEx2 C$249M Pre-Production / +C$150M Sustaining OpEx C$51.03/t milled3 Cu Cash Cost4 US$0.84/lb. Zn Cash Cost4 (US$0.37/lb.)
1 The PEA is considered preliminary in nature and includes mineral resources, including inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves have not yet demonstrated economic viability. Due to the uncertainty that may be attached to mineral resources, it cannot be assumed that all or any part of a mineral resource will be upgraded to mineral reserves. Therefore, there is no certainty that the results concluded in the PEA will be realized.
2 Includes 20% contingency.
3 Comprised of $33.54/t mining, $13.39/t processing & $4.10/t G&A.
4 Net of by-product, includes all TC/RC, operating costs & royalties.
All figures are quoted in CDN$ unless otherwise noted; base case metal prices of US$3.08/lb. Cu, US$1.06/lb., Zn, US$0.93/lb. Pb, US$1,238/oz. Au and US$17/oz. Ag and exchange rate of 0.89 based on spot as at Oct. 15, 2014.
The PEA envisages an average throughput rate of 5,000 tonnes per day (tpd) as a conventional underground operation through longhole stoping and cemented paste backfill. The mine is expected to have a 14 year life, with potential to extend the life of operations through resource expansion at depth or delineation of nearby satellite deposits. A stand-alone concentrator is proposed to be constructed adjacent to the McIlvenna Bay mine.
The estimated pre-tax NPV7% is $381.7M, with a 21.9% IRR and 4.1 year payback; post-tax NPV7% is $262.6M, with a 18.9% IRR and 4.1 year payback. Total payable life of mine (LOM) production is expected to be 804.7 million pounds (Mlbs.) of zinc, 513.7 Mlbs. of copper, 15.8 Mlbs. of lead, 218,000 ounces of gold and 5.44 million ounces of silver.
McIlvenna Bay pre-production capital cost (CapEx) is estimated at $207.3M, with a $41.5M contingency, for a total of $248.8M. Sustaining capital is estimated at $125.2M, with a $25.0M contingency, for a total of $150.3M. The total estimated capital cost over the LOM including closure costs net of salvage value is estimated at $332.5M, with a $66.5M contingency, for a total of $399.1M. The majority of mine construction is expected to take 18 months, with underground mine development adding an additional 6 months to the build-out period.
The average on-site operating costs (OpEx) total $51.03 per tonne processed, which is comprised of $33.54 per tonne for mining, $13.39 per tonne for milling and $4.10 per tonne for general and administrative (G&A). OpEx estimates for McIlvenna Bay were prepared incorporating both off-site and on-site infrastructure as related to the mine plan and process schedule.
The base case metal price deck and exchange rate are based on spot prices as at October 15, 2014 and are US$3.08/lb for copper, US$1.06/lb for zinc, US$0.93/lb for lead, US$1,238/oz. for gold, and US$17.00/oz. for silver, with a CDN$/US$ exchange rate of 0.89.
The PEA was led by JDS and Mining Inc. (JDS). All input estimates are based on budget quotations, peer comparisons and JDS' recent experience in projects of similar scope. All figures are quoted in CDN$ unless otherwise noted.
Note: The PEA is considered preliminary in nature and includes mineral resources, including inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves have not yet demonstrated economic viability. Due to the uncertainty that may be attached to mineral resources, it cannot be assumed that all or any part of a mineral resource will be upgraded to mineral reserves. Therefore, there is no certainty that the results concluded in the PEA will be realized.