The Idaho Cobalt Project, located in east central Idaho, is a unique 100% owned primary cobalt deposit with production estimates of 1,525 tons annually of super-alloy grade high purity cobalt metal over a minimum ten year mine life. The project's output will be equivalent to 3.3% of the entire global cobalt supply and it will be able to feed 14.9% of North American demand for cobalt.
Earnings Projections & Economics (US$)
The SEDAR filed Technical Report, derived from the more comprehensive Bankable Feasibility Study, revealed a conservative base case scenario utilizing a cobalt price of $22.52 per pound and a 7.5% discount rate, of Net Present Value (NPV) $87.29 million, Internal Rate of Return (IRR) 22.30%, average operating cost $7.73 per pound of cobalt and average annual Net Cash Flow $34 million over a ten year mine life. Total estimated capitalization expenditures for the mine, mill, and retrofitting of the hydrometallurgical refining facility were estimated at $138.7 million. The Company continues to internally optimize costs to construct through additional engineering and procurement studies. Current results indicate that the total capitalization expenditures for the ICP are expected to be approximately US$141.9 million which includes the reclamation bonding costs. This new cost estimation consists of US$88.4 million for the mine concentrator, infrastructure and bonding and US$53.6 million for the retrofitting of the hydrometallurgical plant.
Reserves and Resources
Diluted, Proven and Probable Reserves of the project currently stand at 2.636 million tons @ 0.559% cobalt, 0.596% copper and 0.014 ounces per ton gold utilizing a 0.2% cobalt cut-off for a ten year mine life. This represents contained metals in a Proven and Probable Reserve category of 29.5 million pounds of cobalt, 31.4 million pounds of copper and 37 thousand ounces of gold. In addition, there are Inferred Resources of 1.122 million tons grading 0.585% cobalt, 0.794% copper and 0.017 ounces per ton gold (after MDA, 2006) representing contained metal of 13.1 million pounds of cobalt, 17.8 million pounds of copper and 19 thousand ounces of gold. In January 2011, results from the 2010 ICP mine plan optimization drill program were received and assays confirmed economic ore grade mineralization in an additional 390 feet along strike to the south and 200 feet down dip, representing a 14% increase in the known strike extension of the Ram deposit to 3,200 feet. These results are expected to increase the reserve / resource base and mine life of the project. A total of 5,727.5 feet were drilled in six holes in a previously untested area along the southern extension of the Ram deposit.
Minimal Environmental Impact
The underground operation will create minimal surface disturbance and will be 100% self-contained with the goal of no measurable impact on surface waters. Low impact methods will help to ensure a minimal environmental footprint. Formation is dedicated to environmentally sound practices for mine construction, production and eventual closure. Formation strongly believes that this project will exemplify how mining and respect for our environment can co-exist.
Idaho Cobalt Project Status
The project received a positive National Instrument 43-101 compliant Bankable Feasibility study in July 2007, a final Environmental Impact Statement in June 2008, a Record of Decision from the US Department of Agriculture Salmon Challis National Forest in January 2009, a Record of Decision from the U.S. Environmental Protection Agency in February 2009 and a Section 401 Certification from the Idaho Department of Environmental Quality in February 2009. Stage 1 Construction was completed in 2010 and Stage 2 Construction, which will involve mine site facility construction and mine development, is now underway with JDS Energy and Mining Inc.'s subsidiary contracted for Project and Construction Management Services. Production estimates are targeted for Q3 2012, pending succesful conclusion of mine financing.
Potential to Increase ICP Mine Reserves:
The potential to dramatically increase reserves is considered excellent with a district potential of 50 million tons (after Hughes). The project contains over 20 distinct target zones and of those only four have been drilled to date. Of those four, only one is being used (the Ram deposit) in the calculations of reserves and resources in the current mine plan. This deposit remains open at depth and along both strike directions.
