Vancouver – Continental Precious Minerals (CZQ-T) has released a preliminary economic assessment on its polymetallic Viken project in Sweden that outlines a pre-tax net present value of US$1.04 billion.
The study outlines two open pits with a focus on recovering the uranium, vanadium and molybdenum found on the Viken MMS alum shale licences.
As of March, 2009, the Viken project hosts an indicated resource of 23.6 million tonnes grading 0.019% U3O8, 0.313% V2O5, 0.028% Mo and 0.032 Ni. The project hosts a further 2.83 billion inferred tonnes grading 0.017% U3O8, 0.268% V2O5, 0.024% Mo and 0.032% Ni. Nickel was not factored into the study results.
The PEA included 9 million indicated and 214 million inferred tonnes, using a net smelter return cutoff grade of US$60 per tonne for the base case. The study used base case metal prices of US$65.3 per lb. U3O8, US$15 per lb. vanadium and US$15 per lb. molybdenum.
The base-case scenario looks at a 40,000-tonne-per-day operation with a 16-year mine life and a 0.5 to 1 strip ratio. The two open pits would be less than a kilometre apart, with both mined through conventional drilling and blasting.
Pre-production capital expenditures are estimated to be US$3.85 billion with a payback period of just over 7 years. The study puts the internal rate of return at 10.3%, while the US$1.4 billion NPV is based on a 6.5% discount rate. The life-of-mine average net smelter return value is estimated at US$89.57 per tonne while operating costs are pegged at US$50.64 per tonne.
The Viken project sits roughly 500 km south of the Arctic Circle in the central Sweden. The licence area covers 677 hectares and consists of black shales interlayered with subordinate quartzites, limestones and bituminous limestones.
Preliminary bench-scale metallurgical results, which the company released in January, indicate potential recoveries of roughly 90% uranium, 90% molybdenum and 70% vanadium. Uranium and molybdenum showed good recoveries under conventional conditions while the vanadium required roasting to make it more soluble. The metallurgical results were based on 47 leaching and roasting tests.
The company, meanwhile, has had some trouble acquiring land on its MMS Viken licence. After entering into an agreement to buy 8 hectares of farmland on the licence block for $120,000, the County Administrative Board rejected the deal. Continental has failed on three attempts to appeal the decision and is now appealing it to the Supreme Administrative Court in Sweden.
Because the PEA study was preliminary, it did not take into account local socio-political factors, nor the cost of land acquisition.
Continental’s share price was up 2¢ or 4% to close at 52¢ on the latest news. The company has a 52-week share price range between 37¢ and $1.47 and 51.6 million shares outstanding.
Continental Precious Minerals acreage lies on the west side of a major water resource, for hydro power generation and water supply to towns downstream. Could management tell the public what the current status is of the mining licence application(s) from the Bergstaten, as well as environmental approval from their local lanstyrelsen? Apart from the perceived positive economics of the PEA, has the local population bought in to the concept of strip mining next to pristine water storage bodies?
Social aspects of projects are given equal importance in Sweden, and yet these topics are rarely discussed by CZQ-T.