Globex Mining unveils PEA for Timmins talc-magnesite project, 20% after-tax IRR

Globex Mining Enterprises (TSE:GMX) (OTCQX:GLBXF) unveiled Friday the "positive" results of a preliminary economic assessment (PEA) on its large Timmins talc-magnesite project, located 13 kilometres south of Timmins, Ontario.
The company said the results of the PEA support completing a feasibility study, including a program of infill drilling to upgrade the known resource to reserve status.
Technical studies to permit production at the mine site have been underway for over a year, Globex added.
The economic study, completed by Jacobs Minerals Canada and Micon International, estimated a net present value of $258.0 million, after tax and at a discount rate of eight percent, with a 20 percent internal rate of return and a payback period of 5.8 years.
The model assumes the first 20 years of mining, and a process feed rate of 500, 000 tonnes per year, with strip ratios averaging 2.4 to produce high-brightness talc and magnesium oxide.
The study was constructed around a conceptual open pit mining model assuming contract mining, crushing and haulage to a nearby processing plant.
The average grade for the first 10 years was calculated at 34.6 percent talc and 52.4 percent magnesite, Globex said.
Total operating costs were estimated at $986.5 million for the 20-year mining period or an average of $98.65 per tonne processed.
Total pre-production capital expenditures are seen at $268.4 million over a two year period, excluding working capital. Total sustaining capital was estimated at $64.9 million.
In addition, working capital of $16.0 million, the equivalent of four months of operating costs, has been set to be maintained throughout the production period.
The company said total gross sales over the first 20 years, of a total mine of 60 plus years, were projected at $2.58 billion from talc production of 2.47 million tonnes and magnesia output of 2.38 million tonnes.
These calculations assume a $500 per tonne talc sales price, and a $570 per tonne magnesia sales price.
The cash operating margin averages 61 percent over the initial 20-year period, Globex said.

The PEA report was based on an initial mineral resource report on the project from March 2010, which included 12.73 million indicated tonnes at a grade of 52.1 percent magnesite and 35.4 percent talc in the A Zone Core, with 18.78 million inferred tonnes at a grade of 53.1 percent magnesite and 31.7 percent talc.

In addition, the A Zone Fridge holds another 5.0 million tonnes of inferred resources, grading 34.2 percent magnesite and 33.4 percent talc.

The optimized open pit shell contains a mineral resource sufficient to support a 60-year mine life, with the PEA only considering the first 20 years of this period, Globex said.

Globex also noted that the mangesia leach and decomposition process has not yet been demonstrated at the scale of the proposed commercial production plant.
The company plans to continue to work together with provincial and municipal authorities, and the First Nations and the Métis Nation of Ontario for the project.