The Inferred class of mineralization declined in tonnage by approximately 86%, but increased the grade of nickel by 20% and decreased the grade of copper by approximately 14% due to the following reasons:
Near-surface peridotite hosted mineralization however, remains open to the south in certain areas of the deposit. Higher-grade mineralization remains open at depth below the eastern end of the resource pit and mineralized intercepts remain open to the east. These areas will be the target of future exploration drilling.
The Company notes that while it demonstrated the viability of nickel copper separation in its Phase 1 Metallurgical Test Program (see news release dated March 1, 2017), the next step is to physically produce separate concentrates. The Company intends to complete the Phase 2 Metallurgical Test Program utilizing the mini pilot plant at XPS labs in Sudbury, Ontario.
Table 1 summarizes the 2017 Mineral Resources at the Wellgreen Project. The economic cut-off is reported in terms of NSR in US$/tonne. The Company believes that reporting NSR is a more appropriate method of reporting a polymetallic deposit than on a platinum or nickel equivalent basis. The change to NSR cut-off provides the basis to include benefits from all economic metals, alleviates the potential confusion of equivalent metal calculations and is a commonly accepted practice in the industry.
Readers are cautioned that mineral resources are not mineral reserves and do not have demonstrated economic viability. Readers are also cautioned that inferred resources are considered too speculative geologically to have economic considerations applied to them.
Table 1 details metal price assumptions based on the consensus long term metal price forecasts by various banks and commodity trading firms. Mining, smelting, refining and transportation costs were derived through internal work necessary for the resource estimation and are expected to become part of a future PEA or PFS.
A considerable amount of technical work has been performed on the Wellgreen Project over the past 12 months. Due to the changes in the resource estimate, improved understanding of the geologic model, current work underway on relocation of the plant and tailings facilities and other factors that have changed since the publication of the PEA filed on SEDAR by the Company on March 19, 2015 (the "2015 PEA"), the Company advises that the 2015 PEA has become outdated and should not be relied upon. The Company intends to publish a new technical report within 45 days of this news release which will consist of the 2017 resource estimate. Additional mine planning studies remain underway.
| Table 1 |
| Wellgreen Project |
| Mineral Resources |
| June 2017 |
|
| Mineral Resources, US $13.85/tonne NSR Cut-off |
| Prices, US$ -----> | $7.75 | $3.00 | $11.80 | $1,350 | $860 | $1,400 |
| Contained Metal |
| /lb | /lb | /lb | /oz | /oz | /oz |
| Ni M Lbs | Cu M Lbs | Co M Lbs | Pt K Ozs | Pd K Ozs | Au K Ozs |
| Class | Ktonnes | Ni % | Cu% | Co% | Pt g/t | Pd g/t | Au g/t |
| Measured | 98,800 | 0.25 | 0.16 | 0.015 | 0.253 | 0.243 | 0.051 |
| 544 | 356 | 33 | 805 | 773 | 160 |
| Indicated | 263,200 | 0.26 | 0.13 | 0.015 | 0.223 | 0.244 | 0.036 |
| 1,531 | 733 | 88 | 1,887 | 2,067 | 308 |
| Total M+I | 362,000 | 0.26 | 0.14 | 0.015 | 0.231 | 0.244 | 0.040 |
| 2,075 | 1,089 | 121 | 2,692 | 2,840 | 468 |
| Inferred | 118,600 | 0.28 | 0.12 | 0.015 | 0.217 | 0.253 | 0.032 |
| 741 | 312 | 40 | 829 | 964 | 124 |
Notes
Average grade calculations on Table 1 are impacted by rounding.
Tonnages are reported in units of 1,000 metric tonnes (Ktonnes).
Contained Base Metal reported in units of 1,000,000 lbs (M Lbs).
Contained Precious Metal reported in units of 1,000 troy ounces (K Ozs).
Average Strip ratio: 2:22 to 1
Metal Prices for Resource Determination in US$
Nickel: $7.75/lb; Copper: $3.00/lb; Cobalt: $11.80/lb; Platinum: $1,350/troy oz; Palladium: $860/troy oz; Gold: $1,400/troy oz.
Mining and Processing Costs in US$
Exchange Rate: $1.00 CDN = $0.78 US
Mining costs, vary by bench, separately for ore and waste.
Average mining costs for ore and waste within the resource pit: $1.85/tonne of total material moved.
Processing plus General and Administration: $13.85/tonne Ore.
Process recoveries, to bulk concentrate, vary by rock type for all metals and head grade for copper and nickel.
The average calculated process recoveries for the metals in the mineral resource are:Ni: 59.2%; Cu: 77.7%; Co: 60.9%; Pt: 53.3%; Pd: 60.4%; and Au: 78.3%
Smelting, refining, freight, and royalty costs vary by rock type and metal. The average of these calculated costs in US$ are:Ni: $3.25/lb; Cu: $1.81/lb; Co: $7.71/lb; Pt: $692/troy oz; Pd: $441/troy oz; and Au: $1,342/troy oz
Overall slope angles vary from 38 to 42 degrees depending on the geotechnical domain
_______________
Mineral resource classification was determined based on the number of drill holes, number of composites, and the average distance of composites to the estimated block. Classification was completed, by reference to the definitions within NI 43-101 and the CIM Definition Standards.
A computer-generated pit geometry was developed by AGP Mining Consultants, Inc. using the Lerchs-Grossman algorithm. John Marek of Independent Mining Consultants ("IMC") has verified the results using the floating cone algorithm and has confirmed that the resource pit has reasonable prospects of economic extraction.
Mine Planning Activities
The current concept for the project envisions a large-scale process facility generating and marketing a bulk nickel concentrate over the mine life, which is currently in excess of 20 years based on the updated mineral resources described in this news release. However, the work to be initiated in 2017 will include examining the viability of producing separate nickel and copper concentrates and the impact such separation might have on both the mine plan and potential economics of the project. In order to capture the potential economic contributions of multiple metals and head grade / process recovery formulae, an NSR grade has been estimated for each mineralized block and used for cut-off application. As the NSR value considers process recoveries, assumed smelter terms and concentrate transport costs, the break-even mill cut-off is equal to the sum of the process, G&A and tailing management operating costs.
The Company has been working with AGP Mining Consultants on the overall mine design and plan including throughput rates for mining, facilities locations, etc.
Quality Assurance, Quality Control
Wellgreen retained IMC of Tucson, Arizona to complete the 2017 Resource Estimate. IMC has experience in base metals, precious metals and industrial minerals and has been retained by more than 250 mining companies and completed work on over 500 mining projects worldwide over the past 30 years. John Marek, President of IMC, is the Qualified Person on the Wellgreen Project pertaining to resource estimation.
The technical information disclosed in this news release was reviewed and approved by John Marek of IMC, RM-SME., who is a "Qualified Person" as defined in NI 43-101 – Standards of Disclosure for Mineral Projects, and an independent consultant to the Company.
Mr. Marek has verified the data disclosed in this news release and no limitations were imposed on the verification process. In the course of data verification, and for purposes of QA/QC, Mr. Marek, among other things, reviewed or developed the following types of information for the deposit:
- Geologic maps and sections
- Sampling procedure and assaying methods
- QA/QC protocols and results, including:
- Statistical evaluations and studies
- Checked reliability of historic information and established protocol for acceptance or rejection of legacy data
- Block model methods, parameters, tabulations, and model results
- Estimated mining and process costs
- Resource determination procedures and results to assure reasonable expectation of economic extraction
Other than as described below and in the Company's annual filings (which are available at www.sedar.com), there are no known legal, political, environmental or other risks that could materially affect the potential development of the mineral resources at this point of time.
Cautionary Note Regarding Forward Looking Information: This news release includes certain information that may be deemed "forward-looking information". Forward-looking information can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology, or negative connotations thereof. All information in this release, other than information of historical facts, including, without limitation, the size and scale of the Wellgreen deposit, future exploration and development of the Wellgreen project, the undertaking of future activities and work programs at the Wellgreen project, realization of the potential of the Wellgreen deposit, the active advancement of the Wellgreen project, and general future plans and objectives for the Company and the Wellgreen project, including completion of the Phase 2 Metallurgical Test Program, a PEA or PFS, and mine planning, including planned facilities locations, are forward-looking information that involve various risks and uncertainties. Although the Company believes that the expectations expressed in such forward-looking information are based on reasonable assumptions, such expectations are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking information. Forward-looking information is based on a number of material factors and assumptions. Factors that could cause actual results to differ materially from the forward-looking information include changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, defects in title, availability of personnel, materials and equipment on a timely basis, accidents or equipment breakdowns, delays in receiving government approvals, the Company's ability to maintain the support of stakeholders necessary to develop the Wellgreen project, unanticipated environmental impacts on operations and costs to remedy same, and other risks detailed herein and from time to time in the filings made by the Company with securities regulatory authorities in Canada. Mineral exploration and development of mines is an inherently risky business. Accordingly, actual events may differ materially from those projected in the forward-looking information. For more information on the Company and the key assumptions, risks and challenges with respect to the forward looking information discussed herein, and about our business in general, investors should review our most recently filed annual information form, and other continuous disclosure filings which are available at www.sedar.com. Readers are cautioned not to 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.