Vancouver – Senegal-focused and Australia-based Mineral Deposits (MDM-T, MDL-A) has released a feasibility study on its 90%-owned zircon-ilmenite mineral sands project that outlines the first 14 years of operation.
The Grande Cote mineral sands project is located roughly 80 km northeast of Dakar and involves a 100-km-long stretch of sand dunes averaging 4 km in width. The company plans a large-scale dredge operation, mining roughly 55 million tonnes per year.
The study outlines ore reserves of 751 million tonnes grading 1.8% heavy minerals on the 446-sq.-km property. Mineral Deposits has completed over 150,000 metres of reverse circulation drilling and 45,000 metres of hand auger holes to establish the resource.
The company estimates production of roughly 80,000 tonnes of zircon and 575,000 tonnes of ilmenite a year, which would represent approximately 7% of global zircon output and 10% of ilmenite output.
Zircon is used as a refractory, in foundry sands and for ceramic opacification. The mineral is also marketed as a natural gemstone and its oxide is processed to produce the imitation diamonds known as cubic zirconia. Ilmenite is used mainly to produce titanium pigment used in paint and other materials.
Capital costs have been pegged at US$406 million, while annual operating costs are estimated to be US$75 million per year. The most significant capital cost is the wet concentrator plant at an estimated US$84.7 million.
The study estimates an internal rate of return of 21% with a projected payback period of five years after production begins.
The company sites an independent study by consultant TZ Minerals International that estimates long-term deficits in zircon and ilmenite markets due to a decrease in supply from existing producers, a lack of new projects and increased consumption.
Mineral Deposits bid for the right to develop the property in 2004, the same year it secured the Sabodala gold project in eastern Senegal through an open tender. The company holds a 25-year mine lease for the Grande Cote project and a 15-year exemption from taxation.
The Senegalese government holds a 10% free carried interest in the project. The government also has a 5% gross production royalty and will receive dividends once capital costs and loans have been repaid. The company will also contribute US$150,000 to social programs in the area and US$500,000 to Department of Mines and Geology of Senegal for training and equipment needs.
The company hopes to start construction in late 2011 and commercial production in mid-2013.
Elsewhere in Senegal, the company recently started a 10,000-metre drill program to explore its Gora mineralized area. The project is located 25 km northeast of the company’s Sabodala processing plant. The weighted average grade of the first 41 drill holes at Gora was 8.8 grams gold per tonne with an average width of 2.4 metres.
Mineral Deposit’s share price closed at 72¢ on the day of the latest news. The company has 574 million shares outstanding.
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