Technical study

On October 25, 2013, Arianne Phosphate released the completion of the feasibility study of its Lac à Paul Phosphate Mine Project. The FS outlines an open pit mine, a concentrator producing a high quality apatite product and a transport system delivering the product to a year round deep water port on the Saguenay River.

Study Highlights

  • Net Present Value (“NPV”) of US$ 1,910.1 million at an 8% discount rate.
  • Gross revenue, in real terms, of US$ 16,124.8 million and operating cash flow of US$ 7,379.6 million.
  • Internal Rate of Return (“IRR”) of 20.7% with a capital payback of 4.4 years before taxes and mining duties.
  • A 25.75 year mine life (excluding pre-production) with an average annual phosphate concentrate production of 3 million tonnes with a grade of 38.6% P2O5 and with average mill recovery of 90.0%
  • The Initial Capital Cost of the Project is US$ 1,214.7 million comprising US$ 982.5 million for the mine and US$ 232.2 million for the concentrate transport system that delivers product to the deepwater Port of Saguenay open 365 days per year.
  • The All-In Cost onboard the Ship in the Port of Saguenay is US$ 93.7/tonne life of mine (LOM) (i.e. FOB Port of Saguenay), yields an operating margin of 56% with an average selling price of $213/tonne at the port.
  • Measured and Indicated Mineral Resources in the Paul Zone alone of 590 million tonnes grading an average of 7.1% P2O5 at a 4.0% cut-off grade (does not include 164 million tonnes of Manouane Zone mineral resources).
  • 75.7 million tonnes of saleable concentrate at 38.6% P2O5 in Proven and Probable Mineral Reserves reported at 3.5% P2O5 cut-off grade of 472.1 million tonnes at an average grade of 6.9 % P2O5 (taken from the Paul Zone Mineral Resource).
  • Confirmed power availability of 115MWatt at the Chute des Passes power plant located 30 km from the mine.

This Feasibility Study was conducted subsequent to the updated Pre-Feasibility Study, which included the 164 million tonnes M&I resources of Manouane Zone, published by Arianne on July 1, 2012. The FS includes a mineral resource estimate and a mine plan based only on the Paul Zone resources. The results of the FS establish the technical and economic feasibility of an open pit mining operation based on the Paul Zone resources, crushing, grinding and flotation concentration of the phosphate ore, and its transport to a deepwater port based on the Saguenay River which is open 365 days per year.

Operating Costs

Based on all operating costs outlined in the Feasibility Study, the phosphate concentrate average operating cost FOB Port of Saguenay is US$ 93.7/tonne.

Estimate of Operating Costs per tonne of concentrate

Item
Feasibility Study
($/tonne)
Average Extraction Cost
27.3
Average Processing Cost
48.1
Average General and Administrative Cost
4.3
Average Shipping Cost
14.0
Total Operating Cost
93.7

 

Capital Costs

Capital Costs – Mine Site

Item
Feasibility Study
(US$ M)
Mill
470.8
Project General
108.5
General Mine Site
65.3
Mine Development
42.5
Open Pit Mine
29.6
Temporary Construction Facilities & Services
23.1
Construction Support/Equipment/Consumables
57.7
EPCM
61.7
Contingency
73.9
Owner’s Cost
49.4
TOTAL
982.5

The open pit mine development, the ore processing facilities and all on-site infrastructure and services necessary to support the mine operation have an estimate accuracy of +/- 15%.

Capital Costs – Transport

Item
Feasibility Study
(US$ M)
Off-Site facilities & Infrastructure
167.9
Temporary Construction Facilities & Services
7.7
Construction Support/Equipment/Consumables
3.3
EPCM
20.9
Contingency
18.1
Owner’s cost
14.3
TOTAL
232.2

Capital cost for the transport system is estimated at an accuracy of +/- 25%.

Mineral Resources and Mineral Reserves

Paul Zone Mineral Resource Estimate used for the Reserves

Resource
Paul Zone (cut-off grade: 4.0% P2O5)

 

Tonnage (Mt)
Grade (% P2O5)
Measured (M)
336.76
7.22
Indicated (I)
253.48
7.02
Total (M+I)
590.24
7.13
Inferred
9.81
5.89

Since the publication of the feasibility study, resources have been updated. See the geology section for more information.

Mineral Reserve Estimate

Reserve
Paul Zone
(cut-off grade: 3.5% P2O5)
Tonnage (Mt)
Grade (% P2O5)
Proven
313.71
6.92
Probable
158.38
6.80
Total (P+P)
472.09
6.88

 

Mine Plan

The Lac à Paul FS is based on a single open pit and utilizes only Measured and Indicated mineral resources contained within the Paul Zone, which were considered for the development of mineral reserves.

Cegertec WorleyParsons completed the mining engineering technical work for the FS. The mining work was completed using a block model that was provided to Cegertec WorleyParsons by Claude Duplessis of Goldminds Geoservices Inc. Pit optimizations were performed on the Measured and Indicated resources in the model; the pit design yields a LOM of 25.75 years at a 3.5% P2O5 cut-off grade with average grade of 6.88% P2O5. The final pit takes into account operational parameters such as ramps, recommended geotechnical configurations, and the LOM of 25.75 years (excluding pre-production period). The mineral reserves within the pit are presented in Table 9.

The Paul Zone pit will be mined using conventional methods including drilling, blasting, loading and hauling using shovels and trucks.

Metallurgy and Phosphate Concentrate Quality

The results of the metallurgical test work were that a scale-up to a commercial facility will produce a 38.6% P2O5 product at 90% recovery. Chemical analysis of a representative sample of the final concentrate from the process verification test is given in the following table.

Concentrate chemical analysis1

Constituent
Units
Analysis
P2O5
%
38.60
CaO
%
51.25
MgO
%
0.70
Fe2O3
%
2.00
Al2O3
%
0.45
SiO2
%
1.55
TiO2
%
0.65
Na2O
%
0.37
K2O
%
0.19
Cl
%
0.06
F
%
1.08
LOI
%
0.54
CaO/P2O5
Ratio
1.33
MER
Ratio
0.08

1Analysis from COREM, 2013

Overall, the Lac à Paul phosphate concentrate is very high quality for the following reasons:

  • Low CaO/P2O5 ratio leading to low sulfuric acid consumption rates;
  • High P2O5 recovery and high gypsum filtration rates are expected with this rock when used as a feed for conventional wet process phosphoric acid production;
  • The low CaO/P2O5 ratio will generate low amounts of gypsum; and
  • The low MER (minor element ratio) should facilitate easy production of high quality granular fertilizer products, such as MAP and DAP.

Infrastructures

The Project is located 200 km north of the Saguenay-Lac-St-Jean region in Quebec, Canada, an industrial region with a high-quality labour pool and good existing infrastructure. Existing infrastructure includes hydropower generating stations with sufficient capacity for the Project, road and rail networks and a deepwater port.

The Lac à Paul Project will be powered by Hydro-Québec through Rio Tinto Alcan’s power system from the Chute-des-Passes generating station which is located less than 30 km from the Project. A 345-kV to 161-kV step-down substation will be built at Chute-des-Passes. This new substation will supply the power through a 161-kV transmission line.

Construction of a permanent camp, a fresh process water system and pumping station, tailings impoundments and a water treatment station is planned during the preproduction phase. Waste rock dump will be built in the course of mining operations.

A tailings storage facility, located only 2 km away from the concentrator, was selected to store and manage the tailings for the 25.75 years LOM of the Lac à Paul Project.

Documents

NI 43-101 Technical Report
Published on October 18, 2016