BASE METALS — Niocan gets thumbs-up for niobium project

Based on a positive feasibility study, Niocan (NIO-M) intends to proceed with development of an underground niobium mine and processing plant west of Montreal.

The wholly owned project, situated in the municipality of Oka, 2 km from Hwy. 344, would become one of only four significant niobium producers in the world. Currently, the privately held CBMM and Catalao open-pit mines in Brazil produce about 85% of the world’s niobium, with most of the remainder supplied by the underground Niobec mine near Chicoutimi, Que., a joint-venture between Teck (TEK-T) and Cambior (CBJ-T).

With demand increasing each year and with the Brazilians boosting their production last year by roughly 20%, the new mine is expected to re-establish Canada’s market share of the steel-gray metallic element, which is used in the manufacture of high-strength, low-alloy steels.

The feasibility study was prepared for Niocan by the Met-Chem Pellemon consortium, now owned by SNC-Lavalin. The study is based on 59 holes totaling 22,606 metres drilled by Niocan between 1995 and 1997 (T.N.M., April 14/97). Most were large-diameter (4.6-cm) cores, which, when split, allowed Niocan to obtain bulk-sample material at the same time it carried out definition drilling. Niocan also performed, or contracted out, geophysical surveys, as well as mineralogical and petrographic studies.

Geologically, Niocan’s property sits in the west-central portion of the Oka carbonatite complex — an intrusive formation that occurs in the gabbros, anorthosites and gneisses of the Grenville province.

There, the company has delineated two large niobium deposits, known as Zones 60 and 2. Zone 60 is pipe-shaped with a diameter of about 100 metres and is vertical in orientation. Situated 150 metres southwest of Zone 60, the tabular Zone 2 is more than 600 metres long, 10 to 40 metres wide and near-vertical in dip.

Resources stand at 14.4 million tonnes grading 0.66% Nb2O5 in Zone 60 and 6 million tonnes of 0.56% Nb2O5 in Zone 2. Of that, the combined reserves in Zones 60 and 2 are estimated at 13.3 million tonnes grading 0.63% Nb2O5 using a cutoff grade of 0.50% Nb2O5.

Both zones are open at depth, with the reserves having been calculated to a depth of 500 metres in Zone 60, and to a depth of 250 metres in Zone 2. The zones have a high degree of vertical continuity and it is anticipated that future underground drilling will prove up additional reserves that could extend the mine life to at least 25 from 15 years.

A shaft will be sunk between Zones 60 and 2, and the mine will be developed in two phases. Phase I will consist of the sinking of a 3-compartment shaft and construction of a decline from surface down to a depth of 300 metres.

Phase II development will begin in the fifth year of mining and will extend the shaft and decline to a depth of 530 metres. Mining will make use of the large-diameter blasthole method with paste backfill.

The feasibility study is based on an average daily production rate of 2,500 tonnes for an annual average of 912,500 tonnes by the third year of operations.

So far, concentration tests carried out in a pilot plant and the laboratories of Quebec’s Department of Mines have shown a Nb2O5 recovery of at least 74.1% from samples of material taken from Zone 60.

In all, an average of 9,034 tonnes of pyrochlore concentrate yielding 4,541 tonnes of ferro-niobium (containing 65% niobium) will be produced each year.

A $8.7-million ferro-niobium conversion plant, to be built at the site, will make use of the Casa-Hotorep process, which will recover 97% of the niobium contained in the concentrate.

The total capital cost of the first phase of development is estimated at $89.8 million. The second phase — the deepening of the mine shaft and related underground infrastructure, plus an extension of the tailings dam — is pegged at $11.2 million, to be spent in 2005 and 2006.

The total operating cost has been conservatively estimated at $5.57 per lb.

niobium, and Niocan assumes it can sell its product for the going rate of $9.66 (US$6.90) per lb.

“Our costs per tonne milled are projected as being $10 more than at Niobec, so we feel there is a lot we can do to cut costs.” says Niocan President Ren Dufour. “There’s no reason we can’t get to their level — it’s the same kind of rock and the same kind of operations.”

Tailings will be pumped 1 km to abandoned open pits at the St.-Lawrence Columbium and Metals site, where Niocan acquired mining rights last October.

These new claims contain reported resources of 24.7 million tonnes grading 0.44% Nb2O5, including 9.7 million tonnes in the proven category.

One proposed mining scenario — to gain access to Zones 60 and 2 from a 732-metre shaft at the St. Lawrence site — was rejected in the feasibility study for being too costly and time-consuming.

Dufour says the new mine’s byproduct, apatite, grades almost 10% apatite or 3.75% P2O5), and is likely to add 2% to the project’s return-on-investment.

The company has already performed testwork and produced an apatite concentrate that meets commercial requirements.

By investing $5 million more for apatite recovery, extending the mine life to 25 years and making several cost-saving changes, Dufour says a 25% rate-on-investment is attainable.

He adds that Niocan has had preliminary financing discussions with several banks and other institutions, and that, ideally, the company would like to arrange a deal with a 60-to-40 debt-to-equity ratio. “But first we have to do our environmental and marketing studies and make more contacts with potential buyers,” says Dufour. “We want to tell the market that we are coming in. If a major mining company wants to join us in this project, we’d be happy to do that. But if that doesn’t happen, we can do it ourselves — we are miners.”

The company is looking for a new president to take over full-time from Dufour, who owns 14.1% of Niocan but has been working without remuneration.

The company is also seeking a project manager and other permanent staff. In full production, the project will provide about 155 jobs.

Dufour points out that the appointment of JM Asbestos President Bernard Coulombe as Niocan’s vice-president boosts not only the mining expertise of Niocan’s management, but will also aid in the marketing of niobium, as Coulombe has many years of experience marketing asbestos worldwide.