MGX Minerals Inc. [XMG-CSE] said Wednesday July 18 that it has completed a geotechnical drilling program at its Driftwood Creek magnesium project in southeastern British Columbia.
MGX Minerals is a diversified resource company that is focused on the development of large-scale industrial mineral portfolios in specific commodities and jurisdictions that will fuel the new energy economy.
The company says it is uniquely positioned to pursue this strategy as it holds significant interests in lithium, magnesium, and silicon assets throughout North America.
MGX aims to become just the second producer of magnesium oxide in North America through the development of Driftwood Creek, which hosts a high-grade magnesite deposit currently undergoing permitting and economic analysis.
In keeping with that plan, MGX recently hired engineering firm Hatch Ltd. to conduct a comprehensive review and multi-phase work program to prepare Driftwood for the completion of a NI 43-101-compliant pre-feasibility study that will build on a preliminary economic assessment (PEA) that was announced in March, 2018.
Highlights of the PEA include the following:
- Pre-tax net present value (NPV @ 5% of $529.8 million, IRR of 24.5% with a 3.5-year payback;
- Initial capital costs of $235.9 million (total life of mine $239.8 million includes sustaining/closure costs of $3.9 million and contingency costs of $40 million);
- Conventional quarry pit mine with 1,200 tonne-per day process plant using conventional crushing, grinding, flotation upgrading, calcination, and sintering to produce a saleable Dead burn magnesium oxide (DBM) product, as well as Caustic-calcined magnesium oxide;
- LOM average head grades of 43.27% MgO;
- Mine life of 18.8 years;
- Pre-tax cash flow during production of $1.051 billion.
The Driftwood Creek Project is located approximately 210 km northwest of Cranbrook. Infrastructure currently exists in the form of paved highways and forest service roads, a CPR spur line (at Brisco, B.C.) and a major power line within 15 km of the property.
The PEA is based on a high-grade (43% MgO) and largest (7.8 million tonnes) mineable resource at surface, resulting in recoveries (90% average) with conventional processing (crushing, grinding, flotation upgrading, calcination, and sintering to produce a saleable DBM product).
The company has said the processing plant will be located in Cranbrook, where all mineralized run-of-mine material will be hauled and processed.
The objective of the geotechnical drill program was to establish pit wall stability and assess static pressure of groundwater using piezometers. Highlights from drilling include 87 metres of 41.3% magnesium oxide.
Based on the news results, MGX said the East Zone appears to have considerable potential to expand the magnesite mineral zone to the east and north. The West Zone has potential to contain additional magnesite with high silica-low calcium content in the north (this zone is characterized by distinct purple coloured magnesite).
Based on the grade and interval of magnesite mineralization encountered in geotechnical drilling, the results will be evaluated to further target additional exploration holes. The company plans to carry out an additional 3,350 metres of exploration core drilling at Driftwood in 2018. The intent is to expand the drill indicated resource estimate.
MGX shares were unchanged at 92 cents on Wednesday. The 52-week range is $1.96 and 75 cents.