Argex Mining develops world class mining assets in Quebec

Argex Mining (CVE:RGX) is a junior Canadian resource company that is developing the advanced stage La Blache titaniferous magnetite project, and also owns the Lac Brûlé high grade ilmenite and the Mouchalagane iron ore projects, which are all located on Quebec’s North Shore.

The properties are located in the Manicouagan Region, which covers portions of the Grenville Geological Province near the southern end of the Labrador Trough. The region hosts existing infrastructures including power lines, roads, rail, a deep water sea port, and offers access to skilled labour and affordable housing.

La Blache is the flagship property and hosts three known lenses: Hervieux West, Hervieux East and Lac Schmoo.

Mineral resources have been more fully defined at West Hervieux and East Hervieux with a NI 43-101 compliant Measured and Indicated Resource of 30,888,000 tonnes at 44.27% Fe, 11.26% Ti, and 0.25% V, ( 63.29% Fe2O3, 18.78% TiO2, and 0.45% V2O5 ); and an Inferred Resource of 13,013,000 tonnes at 44.11% Fe, 11.19% Ti and 0.24% V, at a cut-off grade of 40% Fe. 

A third large target has been identified at Lac Schmoo, with historic grades of 19% TiO2, 50% Fe and 0.2% V.

The resources at East and West Hervieux contain more than 5.8 million tonnes of undiluted TiO2 in the Measured and Indicated category, and 2.4 million tonnes in the Inferred category. At a titanium grade of 11.36%, they surpass titanium grades being mined by major international producers that include Iluka Resources (ASX: ILU) grading 6%, Kenmare Resources (TSE:KMR) grading 1.19%, and Sierra Rutile (LON:SRX) grading 1.35%.

The company has already completed drilling, preliminary metallurgical testing, and resource estimation, followed by a positive Preliminary Economic Assessment, and is conducting advanced metallurgical testing and pilot plant trials.

Argex recently acquired a 50.1% interest in Canadian Titanium, which owns the patented CTL process for extracting and producing TiO2 from titanium-bearing iron oxide at a purity of 99.8%, producing a product that has a colour and brightness that meets or exceeds competitive refining processes. The CTL process is an environmentally friendly and closed loop process that operates continuously and produces no chemical discharge. Argex has successfully operated a mini CTL plant for much of the current calendar year that confirms the economic viability of the process.

The process commences with an atmospheric chloride leach of crushed ore that creates a pregnant liquor solution, and culls solid barren residue for disposal. An iron solvent extraction stage produces a raffinate devoid of iron, and an organic loaded with iron that can be stripped to produce Fe2O3 grading 69%. The raffinate can then be processed to recover both V2O5 and TiO2 with a purity of 99.8%.

BBA Inc, in collaboration with Met-Chem Canada and Genivar, completed an independent Preliminary Economic Assessment of La Blache that produced a  positive internal rate of return of 32% calculated on a pre tax basis, and a net present value of $2.2 billion utilizing a discount rate of 8%. Capital costs are estimated at $801.4 million to produce 195,000 tonnes of TiO2 per year, for a mine life exceeding 25 years.

Total operating costs (net of by-products) are estimated at US$586 per tonne of TiO2 averaged over the life of the mine, and applying a sales price of US$2,846 per tonne creates a payback period of seven years. The current price of TiO2 is US$3,740 per tonne and is forecast by Ti Insight to exceed $6,000 per tonne in 2015, for high quality titanium dioxide. The iron from the resource will be processed into iron oxide briquettes and sold for US$135 per tonne.

The initial production rate is pegged at 15,000 tonnes per year, and will ramp up in stages to reach a maximum rate of 195,000 tonnes per year, via the deployment of the modular process plant. Open pit mine capital costs are estimated at US$22.8 million and hydrometallurgical plant cost is $778.6 million in order to achieve the maximum rate of production.

Recoveries in the PEA are assumed to average 87% for TiO2, 90% for Fe and 90% for V. Argex has recently announced TiO2  is now 90%.
Argex is evaluating the establishment of a small scale open pit that utilizes mining contractors, and is already in discussions with end users to design products that meet specific customer needs. This may allow for production of direct shipping ore that can be processed off site, reducing both permitting time, and capital costs.
The company has acquired the nearby Lac Brûlé deposit that hosts historic non -43-101 compliant resources of 3.8 million tonnes grading 30.1% TiO2, which may provide a secondary source of high grade feedstock.
The Mouchalagane Iron Ore Property is located 275 kilometres north of the city of Baie-Comeau, and covers 335 square kilometres of the southern end of the Labrador Trough. The project lies within the prolific Wabush geological formation that hosts large scale iron ore resources of the Fermont and Labrador City area, and forms part of a regional complex of mines that contribute more than 95% of Canada’s iron ore output.
Argex has recently announced it would sell the Mouchalagane Iron Ore Property to its wholly-owned subsidiary, Impact Iron Mines, in an initial step for a proposed “spin-off” for Argex shareholders.
The mineralization at Mouchalange is a coarse grained magnetite and hematite “meta-taconite” style that is very similar to the nearby Mont Reed and Fire Lake resources. Historical drilling across the property tested five shallow targets up to a depth of 100 metres and assayed 31 to 36% Fe.
Recent conceptual data analysis assisted by historic drilling work and recent airborne magnetics on the entire property estimated a conceptual target range of between 940 to 2.31 billion tonnes of iron ore, grading 30 to 35% Fe mineralization.
Historic drilling at Everett Lake, Crazy Lake, North Parr Lake, South Mountain and South Parr Lake allowed for the generation of a conceptual target in the range of 340 to 1,110 million tonnes; and untested areas at North, Central and Southeast allowed for the generation of an additional conceptual target in the range of 600 to 1,200 million tonnes.
Argex is capitalized at $46 million, and carries an NI 43-101 compliant and undiluted titanium dioxide resource of 141.5 tonnes for every $1,000 of the current valuation. Major producers that include Sierra Rutile at 44.9 tonnes of TiO2 are capitalized on the same basis, with Kenmore at 73.8 tonnes, and Iluka at 3.6 tonnes, illustrating the significant undervaluation accorded to Argex and the Lac La Blache resource. 

The undervaluation becomes more glaring when the significant grades at La Blache and the iron ore resource potential at Mouchalange are added.