Pacific Talc sees big profits in the white mineral

A small British Columbia company expects to see some large profits from the mining and processing of talc from a property about 300 km north of Vancouver, near Boston Bar. Pacific Talc (VSE) recently received a prefeasibility study on the project done by consulting engineers Minproc Canada. The study concluded that based on a 25-year mine life and capital costs of $36 million, the project would produce a 30% internal rate of return.

The project hinges on a proprietary process owned by the company which will, through physical and chemical processes, produce a “wettable” talc product. The product will be marketed to the pulp and paper industry as a substitute for kaolin clays currently used as fillers and brighteners in paper production.

The company estimates that the Pacific Northwest imports about 450,000 tonnes of kaolin clay per year, primarily from Georgia and South Carolina. Because of the high transportation costs associated with the U.S. product, Pacific Talc expects it could be price-competitive.

Courtney Parmentier, president of Pacific Talc, noted a number of major pulp and paper producers have expressed an interest in buying the company’s product if it meets their specifications.

Pacific Talc had metallurgical consultants Bacon, Donaldson and Associates test 10 tonnes of a 50-tonne bulk sample; they used the company’s process with positive results.

The project would include an open pit mining operation, with ore trucked 70-100 km to a processing plant somewhere between Hope and Langley, B.C. The plant would be rated to produce about 640 tonnes of talc product per day. Production for the first year is expected to be about 56,000 tonnes rising to more than 100,000 tonnes in the second year and approaching 200,000 tonnes in the third year.

The study estimated mining, milling, and transport costs at $103 per tonne of pure talc produced. Parmentier indicated that the product would sell for $200-300 per tonne depending on quality and expected the average price to be about $250 per tonne.

Reserves on the property currently sit at an inferred 8.2 million tonnes grading 60% talc. Parmentier expects that a final feasibility including an infill drilling program would cost $500,000 and that it could be completed to start construction by this summer. In that event, production would begin in the summer of 1991.

With a small working capital deficit, the company does not have the funds to proceed with the final feasibility, but Parmentier noted that preliminary negotiations have commenced with three major mining companies and one major oil company with respect to a possible joint venture and project financing.

Pacific Talc has about two million shares outstanding and trades at the $1.40 level.