Vancouver — A bankable feasibility study on the Lost Fox deposit area of
The study conducted by engineering consultants Marston Canada, only reviews initial development of Lost Fox, one of four deposits at Mount Klappan, and evaluates production scenarios of 1.5 and 3 million tonnes per year of pulverized coal injection (PCI) material. Project economics show resilience to variability in coal prices.
Lost Fox hosts proven and probable reserves of 60.8 million tonnes of clean coal, supporting a projected 20-year mine life at the modelled 3-million-tonne-per-year operating rate. The four deposits at the Mount Klappan project (Lost Fox, Hobbit-Broatch, Summit and Nass) collectively host measured and indicated resources of 108 million tonnes and 123 million tonnes, respectively. A large inferred and speculative resource of over 2.5 billion tonnes has also been reviewed.
The Marston study models a conventional truck-and-shovel, open-pit operation for Lost Fox. Stripping ratios vary, depending on the mining rate. With a 1.5-million-tonne-per-year rate, it comes in at 7.6 bank cubic metres per product tonne for the first 5 years, averaging 9.7 cubic metres per product tonne over the life of the mine. At 3 million tonnes per year, the strip ratio averages 11.7 cubic metres per product tonne over the life of the mine.
Infrastructure would consist of a wash plant, heavy media separation circuit, cyclones and froth flotation to produce PCI yields of 57-60%. Production possibility of later-stage, premium anthracite products would also be factored into plant design.
As in any large, earth-moving operation, power and transportation are paramount. On that front, the study looks at a variety of truck and rail options to the ports of Prince Rupert, B.C., and Stewart, B.C. Shipping to Stewart would incur significant additional costs due to the required construction of a 60,000-tonne coal storage dome and reclaimer system, plus a 2,000-tonne-per-hour ship loader. Additionally, a 100-km road would need to be built from the community of Bell II, B.C., to the mine site, and a fleet of trucks and support equipment would be required.
The rail option to Prince Rupert requires completion and improvements to the existing Dease Lake line from Prince George, B.C. A significant benefit of the rail line plan is that it opens up a number of transportation and delivery options for Fortune’s coal products.
The feasibility study is based on building an on-site diesel generator to supply the 4-6.2 MW required. Should the British Columbia government proceed with an extension of the Highway 37 power grid into the project area, the planned mine could consider using electric cable shovels, which would lower operating costs.
The study outlined three main operating scenarios: one at a rate of 1.5 million tonnes per year with transport by truck to Stewart; and the other two at a rate of 3 million tonnes per year with transport to Stewart by truck, or by rail to Prince Rupert. Using a US$100-per-tonne price for PCI coal (below current market prices), a 10% discount rate and a US80 long-term exchange rate, the projects show pretax internal rates of return (IRR) of 33%, 35% and 31%, respectively. Mount Klappan coal, with its high carbon content, energy value and very low volatile content, is likely to be priced in the upper end of the world price scale for PCI coal.
Capital cost estimates, using the higher production rate scenario, range from $414 million for the rail to Prince Rupert option to $433 million for the trucking to Stewart option. The hauling by train scenario assumes Fortune will bear half of the estimated $217 million cost in rail line construction and upgrades.
Fortune, through its shareholding in private company Northwest Bulk Terminals, recently emerged as a controversial potential buyer of Crown corporation Ridley Terminals. Northwest Bulk submitted its tendered proposal to Transport Canada to purchase the assets of Ridley Terminals. Other regional coal developers have expressed trepidation at the port being controlled by a private owner due to pricing concerns.
Prince Rupert, an ice-free, deep-water harbour, is the closest North American port to Asia in terms of sailing time. The existing 16-million-tonne-per-year coal facility was constructed by the federal government in the 1980s for output from
Fortune Minerals is in the midst of its environmental assessment process on Mount Klappan, which is expected to be complete in 2006. The company reports being approached by a number of large companies interested in playing a role in the project’s development.
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