M3‐PN130154 Effective Date:
January 15, 2014 Issue Date: January 15, 2014
Mount Hope Project
Form 43-101F1 Technical Report Feasibility Study Eureka, Nevada REVISION 0 Prepared For:
Qualified Persons: Conrad E. Huss, P.E., Ph.D. Robert Davidson, P.E. Art S. Ibrado, Ph.D. Daniel Roth, P.E. John M. Marek, P.E. M3 Engineering & Technology Corporation ● 2051 West Sunset Road, Tucson, AZ 85704 ● 520.293.1488 MOUNT HOPE PROJECT FORM 43-101F1 TECHNICAL REPORT
DATE AND SIGNATURES PAGE
The issue date of this Report is January 15, 2014. The effective date of this Report is January 15, 2014. The effective date of the Mineral Reserve estimate is December 14, 2013. See Appendix A, Feasibility Study Contributors and Professional Qualifications, for certificates of Qualified Persons. These certificates are considered the date and signature of this Report in accordance with Form 43-101F1.
(Signed) “Conrad E. Huss” January 15, 2014 Conrad E. Huss, P.E., Ph.D. Date
(Signed) “Robert Davidson” January 15, 2014 Robert Davidson, P.E. Date
(Signed) “Art S. Ibrado” January 15, 2014 Art S. Ibrado, Ph.D. Date
(Signed) “Daniel Roth” January 15, 2014 Daniel Roth, P.E. Date
(Signed) “John Marek” January 15, 2014 John Marek, P.E. Date
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MOUNT HOPE PROJECT FORM 43-101F1 TECHNICAL REPORT FEASIBILITY STUDY EUREKA, NEVADA
TABLE OF CONTENTS
SECTION PAGE DATE AND SIGNATURES PAGE ...... I TABLE OF CONTENTS ...... II LIST OF FIGURES AND ILLUSTRATIONS ...... IX LIST OF TABLES ...... XI 1 SUMMARY ...... 1 1.1 KEY DATA ...... 2 1.2 SUMMARY ...... 3 1.3 SCOPE ...... 5 1.4 RELIANCE ON OTHER EXPERTS ...... 6 1.5 PROPERTY ...... 6 1.6 OWNERSHIP ...... 6 1.7 LOCATION ...... 6 1.8 GEOLOGY ...... 7 1.9 EXPLORATION STATUS ...... 7 1.10 MINERALIZATION ...... 8 1.11 MINERAL RESOURCES AND RESERVES ...... 8 1.12 DEVELOPMENT AND OPERATIONS ...... 9 1.12.1 Mining ...... 9 1.12.2 Process Plant ...... 10 1.12.3 Schedule ...... 10 1.13 AUTHORS’ CONCLUSIONS ...... 10 1.14 RECOMMENDATIONS ...... 11 2 INTRODUCTION ...... 12 2.1 PURPOSE ...... 12 2.2 SOURCES OF INFORMATION ...... 12 2.3 QUALIFIED PERSONS AND SITE VISITS ...... 12 2.4 TERMS OF REFERENCE AND UNITS OF MEASURE ...... 13
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3 RELIANCE ON OTHER EXPERTS ...... 16 4 PROPERTY DESCRIPTION AND LOCATION ...... 17 4.1 CLAIMS ...... 17 4.2 OWNERSHIP ...... 22 4.2.1 Grazing Allotments and Agricultural Use ...... 23 4.2.2 Survey of Property ...... 23 4.2.3 Location Map ...... 24 4.3 ROYALTIES, AGREEMENTS, AND ENCUMBRANCES ...... 24 4.3.1 Advance Royalty ...... 25 4.3.2 Production Royalty ...... 25 4.3.3 Encumbrances ...... 25 4.4 ENVIRONMENTAL AND PERMITTING CONSIDERATIONS ...... 26 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 30 6 HISTORY ...... 32 6.1 RECENT HISTORY OF OWNERSHIP OF THE PROJECT ...... 33 7 GEOLOGICAL SETTING AND MINERALIZATION ...... 35 7.1 REGIONAL GEOLOGY ...... 35 7.2 PROJECT AREA GEOLOGY ...... 36 7.3 MINERALIZATION ...... 38 7.3.1 Eastern and Western Minerals Systems ...... 38 7.3.2 Overlap Zone ...... 39 8 DEPOSIT TYPES ...... 40 9 EXPLORATION ...... 41 10 DRILLING ...... 42 11 SAMPLE PREPARATION, ANALYSES AND SECURITY ...... 44 11.1 SAMPLING METHOD AND APPROACH ...... 44 11.2 SAMPLE PREPARATION, ANALYSES, AND SECURITY ...... 44 12 DATA VERIFICATION ...... 46 12.1 GMI QAQC ...... 46 12.2 CHECK ASSAYS OF EXXON DATA ...... 49 12.3 CHECK ASSAY SAMPLE PREP AND ASSAY PROCEDURES ...... 49 12.4 EXXON QA/QC PROCEDURES ...... 50 12.5 NEAREST NEIGHBOR GMI VERSUS HISTORIC DRILLING...... 51
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12.6 CORRECTIONS TO EXXON MOLYBDENUM OXIDE ASSAYS ...... 53 12.7 DIAMOND DRILLING VERSUS RC DRILLING ...... 54 13 MINERAL PROCESSING AND METALLURGICAL TESTING ...... 55 13.1 COMMINUTION ...... 55 13.1.1 Comminution Testing and Modeling ...... 55 13.1.2 Comminution Test Results and Circuit Design ...... 56 13.1.3 Design of Grinding Circuit ...... 56 13.1.4 Update of Grinding Circuit Design ...... 57 13.2 FLOTATION TESTS ...... 61 13.2.1 Flotation Test Samples ...... 61 13.2.2 Flotation Test Results from Exxon ...... 65 13.2.3 MSRDI Flotation Test Results ...... 66 13.2.4 SGS Flotation Test Results ...... 66 13.3 MOLYBDENITE CONCENTRATE LEACH ...... 72 13.4 REGRIND AND CONCENTRATE THICKENERS ...... 73 13.4.1 Regrind Thickener ...... 73 13.4.2 Concentrate Thickener ...... 73 13.5 TAILING TESTS ...... 73 13.5.1 Settling Tests and Thickener Design ...... 73 13.5.2 Measurement of Cyclone Parameters for Tailing Cycloning ...... 74 13.6 FLOTATION AND CONCENTRATE LEACH REAGENTS ...... 74 13.7 PRODUCT SPECIFICATIONS ...... 75 14 MINERAL RESOURCE ESTIMATES ...... 76 14.1 GEOLOGY AND ALTERATION CODING ...... 76 14.2 BLOCK GRADE ESTIMATION ...... 77 14.3 ESTIMATION OF SULFIDE MOLY ...... 80 14.4 DENSITY ...... 81 14.5 CLASSIFICATION ...... 81 14.6 SULFUR AND CARBON FOR ARD MODELING ...... 82 14.7 MINERAL RESOURCES ...... 85 15 MINERAL RESERVE ESTIMATES ...... 87 16 MINING METHODS ...... 90 16.1 PHASE DESIGNS ...... 90 16.2 WASTE AND LOW GRADE STORAGE...... 92
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16.3 MINE EQUIPMENT REQUIREMENTS ...... 93 16.4 MINE LABOR REQUIREMENTS ...... 94 16.5 MINE PLAN AND DUMP DRAWINGS ...... 94 17 RECOVERY METHODS ...... 106 17.1 PROCESS DESIGN CRITERIA ...... 106 17.2 PROCESS DESCRIPTION...... 110 17.3 METSIM MASS BALANCE ...... 111 17.4 PRIMARY CRUSHING AND OVERLAND CONVEYING ...... 111 17.5 COARSE ORE STORAGE ...... 112 17.6 GRINDING AND CLASSIFICATION ...... 112 17.7 FLOTATION PLANT ...... 113 17.7.1 Rougher Flotation ...... 114 17.7.2 First Cleaner and First Cleaner Scavenger Flotation ...... 114 17.7.3 Concentrate Regrinding ...... 114 17.7.4 Second Cleaner Flotation ...... 115 17.7.5 Third Cleaner Flotation...... 115 17.7.6 Fourth Cleaner Flotation ...... 115 17.7.7 Fifth Cleaner Flotation ...... 115 17.7.8 Sixth Cleaner Flotation ...... 116 17.7.9 Seventh Cleaner Flotation ...... 116 17.8 CONCENTRATE DEWATERING ...... 116 17.9 CONCENTRATE LEACHING ...... 117 17.10 CONCENTRATE DRYING ...... 117 17.11 CONCENTRATE ROASTING ...... 117 17.12 ROASTER OFF-GAS HANDLING AND TREATMENT ...... 118 17.13 TAILING DEWATERING ...... 118 17.14 PROCESS CONTROL SYSTEM ...... 119 18 PROJECT INFRASTRUCTURE ...... 120 18.1 EUREKA HOUSING DEVELOPMENT...... 120 18.2 POWER ...... 120 18.3 WATER ...... 120 18.4 TAILING DESIGN ...... 121 19 MARKET STUDIES AND CONTRACTS ...... 124 19.1 MARKET STUDIES ...... 124
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19.2 CONTRACTS ...... 125 20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ...... 126 20.1 ENVIRONMENTAL STUDIES ...... 126 20.1.1 Environmental Impact Statement ...... 126 20.1.2 Environmental Impacts and Mitigation Measures ...... 126 20.1.3 Acid Rock Drainage Modeling ...... 129 20.2 PERMITS ...... 130 20.2.1 Plan of Operations Approval ...... 130 20.2.2 Air Quality Permit ...... 131 20.2.3 Water Pollution Control Permit ...... 131 20.2.4 Reclamation Permit ...... 131 21 CAPITAL AND OPERATING COSTS ...... 133 21.1 OPERATING COSTS ...... 133 21.1.1 Mining Cost ...... 133 21.1.2 Plant Processing Cost ...... 136 21.1.3 Tailing Operating Costs...... 136 21.1.4 Energy Costs ...... 136 21.1.5 General and Administrative Costs ...... 136 21.1.6 Shipping Cost ...... 136 21.2 BASIS OF CAPITAL COST ESTIMATE ...... 136 21.3 CAPITAL COST ESTIMATE ...... 138 21.4 MINE CAPITAL COSTS ...... 139 22 ECONOMIC ANALYSIS ...... 141 22.1 BASIS OF FINANCIAL MODEL ...... 141 22.1.1 Economic Start Date and Life of the Project ...... 141 22.1.2 Exchange Rate ...... 141 22.1.3 Date of Estimate ...... 141 22.1.4 Revenue ...... 141 22.1.5 Initial Capital ...... 141 22.1.6 Sustaining Capital ...... 141 22.1.7 Working Capital ...... 141 22.1.8 Salvage Value ...... 142 22.1.9 Operating Cost ...... 142 22.1.10 Cost Applicable to Sales ...... 142 22.1.11 Royalties ...... 142 22.1.12 Reclamation ...... 142 22.1.13 Total Production Cost ...... 142 22.1.14 Depreciation ...... 142
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22.1.15 Project Financing ...... 143 22.1.16 Nevada Net Proceeds Mineral Tax ...... 143 22.1.17 Federal Income Tax ...... 143 22.1.18 Sales Tax ...... 143 22.1.19 Tax Loss Carry Forward ...... 143 22.1.20 Depletion ...... 143 22.2 TOTAL CASH FLOW ...... 143 22.3 NET PRESENT VALUE, INTERNAL RATE OF RETURN, PAYBACK ...... 144 22.4 SENSITIVITY ANALYSIS ...... 144 23 ADJACENT PROPERTIES ...... 146 24 OTHER RELEVANT DATA AND INFORMATION ...... 147 24.1 GEOTECHNICAL...... 147 24.1.1 Waste Rock Dump ...... 147 24.1.2 Tailing Storage Facilities ...... 148 24.2 PROJECT APPROACH ...... 149 24.3 PROJECT SCHEDULE ...... 151 25 INTERPRETATION AND CONCLUSIONS...... 152 25.1 GENERAL ...... 152 25.2 GEOLOGICAL DATA SUBSTANTIATION ...... 152 25.3 FLOW SHEETS ...... 152 25.4 ECONOMICS ...... 152 25.5 METALLURGICAL TESTING ...... 152 25.6 OPPORTUNITIES ...... 152 25.6.1 Potentially Higher Recoveries ...... 152 25.6.2 Toll Roasting ...... 153 25.6.3 Additions to Ore Reserves ...... 153 25.6.4 Optimized Mine Plan ...... 153 25.7 CHALLENGES OR RISKS ...... 153 25.7.1 Commodity Price ...... 153 25.7.2 Finance ...... 153 25.7.3 Legal ...... 153 25.7.4 Costs ...... 153 25.7.5 Construction Schedule ...... 154 25.7.6 Mine Geotechnical ...... 154 25.7.7 Key Personnel ...... 154 26 RECOMMENDATIONS ...... 155
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27 REFERENCES ...... 156 APPENDIX A – FEASIBILITY STUDY CONTRIBUTORS AND PROFESSIONAL QUALIFICATIONS ...... 159
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LIST OF FIGURES AND ILLUSTRATIONS
FIGURE DESCRIPTION PAGE Figure 1-1: Project Location ...... 7 Figure 4-1: Property Map ...... 17 Figure 4-2: Mine Claim Map ...... 20 Figure 4-3: Well Field Claim Map ...... 21 Figure 4-4: Overall Site Plan ...... 24 Figure 7-1: West-East Geologic Cross-Section Looking North ...... 36 Figure 7-2: Northern Nevada Mines ...... 36 Figure 7-3: West-East Cross-Section Looking North ...... 38 Figure 7-4: High-Grade Quartz-Molybdenite Veins in Mount Hope Ore ...... 39 Figure 12-1: Duplicate Assays, GMI Drilling Program ...... 47 Figure 12-2: Results of Submitted Total Moly Standards ...... 48 Figure 12-3: SRK-GMI Moly Oxide vs. Exxon Moly Oxide Assays QQ Plot ...... 52 Figure 12-4: SRK-GMI Moly Oxide vs. Exxon Moly Oxide Assays – XY Scatter Plot ...... 53 Figure 13-1: Three-dimensional distribution of 114 samples in deposit, hard ore shown in yellow with softer ores shown in light blue ...... 57 Figure 13-2: Grindability samples and silicic alteration shown in light pink...... 58 Figure 13-3: Grindability samples and hard alteration shown in light green...... 58 Figure 13-4: Grindability samples & potassic alteration (light red) that surround the silicic core...... 59 Figure 13-5: Modeled Throughput and P80 by Year ...... 61 Figure 13-6: Drill Core Locations Showing Relative Grades (Plan View) ...... 63 Figure 13-7: Drill Core Locations Showing Relative Grades (East-West Section) ...... 64 Figure 13-8: Drill Core Locations Showing Relative Grades (North-South Section) ...... 65 Figure 13-9: Effect of oxidation on the flotation recovery of molybdenum ...... 67
Figure 13-10: Plot of Recovery v. Head Grade (MoS2)...... 68 Figure 13-11: Predicted Molybdenite Recovery by Year ...... 69 Figure 13-12: SGS locked-cycle test flowsheet with 8 cleaning stages...... 70 Figure 13-13: Proposed Mount Hope Flotation Flowsheet...... 72 Figure 16-1: Pre-Production Map ...... 95 Figure 16-2: Year 1 Map ...... 96
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Figure 16-3: Year 2 Map ...... 97 Figure 16-4: Year 3 Map ...... 98 Figure 16-5: Year 4 Map ...... 99 Figure 16-6: Year 5 Map ...... 100 Figure 16-7: Year 10 Map ...... 101 Figure 16-8: Year 15 Map ...... 102 Figure 16-9: Year 20 Map ...... 103 Figure 16-10: Year 25 Map...... 104 Figure 16-11: Year 34 Map...... 105 Figure 17-1: Simplified Process Flow Diagram for the Mount Hope Project ...... 108 Figure 17-2: Mine Facilities and Process Plant ...... 109 Figure 18-1: Well Field Location Diagram ...... 121 Figure 22-1: NPV Sensitivities ...... 144 Figure 22-2: NPV Molybdenum Price Sensitivities ...... 145
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LIST OF TABLES
TABLE DESCRIPTION PAGE Table 1-1: Summary of Key Project Data...... 3 Table 1-2: Mineral Reserves ...... 9 Table 1-3: Mineral Resources (Excluding Reserves) ...... 9 Table 2-1: List of Qualified Persons ...... 12 Table 4-1: Patented Claims ...... 18 Table 4-2: Unpatented Claims in the Project Area (Plan of Operations Boundary) ...... 19 Table 4-3: Unpatented Claims outside Project Area (Well Field & Area Adjacent to TSF) ...... 19 Table 4-4: Permits Issued...... 27 Table 6-1: History of Mount Hope Project Area ...... 34 Table 10-1: Drill Hole Data Summary ...... 43 Table 12-1: Total Molybdenum Comparison IGMI (GMI) vs. Exxon Drilling ...... 51 Table 12-2: Total Molybdenum Comparison DDH vs. RC Drilling ...... 54 Table 13-1: Summary of Grindability Test Results ...... 56 Table 13-2: Theoretical Modeled Throughput by Operational Year ...... 60 Table 13-3: MSRDI Flotation Test Results ...... 66 Table 13-4: Residence Times and Scale Up Factors for the Flowsheet in Figure 13-12...... 71 Table 13-5: Typical Stage Recoveries Predicted by SGS for the Flowsheet in Figure 13-12...... 71 Table 13-6: Concentrate Leach Test Results ...... 72 Table 13-7: Results of Settling Tests on Flotation Tails ...... 74 Table 13-8: List of Recommended Flotation Reagents ...... 75 Table 13-9: Comparison of Concentrate Assays ...... 75 Table 14-1: Block Model ...... 76 Table 14-2: Rock Type and Alteration Codes ...... 77 Table 14-3: Cap Values Applied to Assays Prior to Compositing ...... 78 Table 14-4: Deposit Indicator Kriging Parameters ...... 79 Table 14-5: Deposit Grade Kriging Parameters ...... 80 Table 14-6: Grade Estimation Parameters ...... 84 Table 14-7: Mineral Resources – December 14, 2013 ...... 86 Table 15-1: Floating Cone Input Parameters ...... 88
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Table 15-2: Mineral Reserves and Mineral Resources – December 14, 2013 ...... 89 Table 16-1: Mine Production Schedule – Proven and Probable Ore Only (Low Grade Stockpile Cutoff = 0.034% Sulfide Mo) ...... 92 Table 16-2: Mount Hope Major Mine Equipment Units ...... 93 Table 17-1: Process Design Criteria Elements ...... 107 Table 17-2: Head Grade and Recoveries for Mass Balance Simulations ...... 111 Table 17-3: Major Equipment in the Grinding Area ...... 113 Table 17-4: Flotation Plant Equipment ...... 114 Table 21-1: Summary of Operating Cost ...... 133 Table 21-2: Mine Capital and Operating Costs ...... 135 Table 21-3: Craft Labor Costs ...... 138 Table 21-4: Estimated Budget, $ Millions ...... 138 Table 21-5: Summary of Capital Cost ...... 139 Table 22-1: MHMI and Exxon Combined Royalty Schedule ...... 142 Table 22-2: NPV Sensitivity ...... 144 Table 24-1: Results of Slope Stability Analyses ...... 148 Table 24-2: Embankment Response ...... 149
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LIST OF APPENDICES
APPENDIX DESCRIPTION
A Feasibility Study Contributors and Professional Qualifications
Certificate of Qualified Person (QP)
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1 SUMMARY
This technical report is prepared and formatted according to the National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (NI 43- 101).
This technical report is based on the comprehensive “Mount Hope Project, Molybdenum Mine and Process Plant, Bankable Feasibility Study” issued by M3 Engineering & Technology (M3) in September 2007. Formatting changes were made to this document in April 2008 to make the document compliant with NI 43-101 in a report titled “Mount Hope Project, Molybdenum Mine and Process Plant, Feasibility Study, NI 43-101 Technical Report” dated April 25, 2008 (the “2008 NI 43-101 report”), which was then filed on SEDAR. In addition, a third party review of metallurgy took place, thus the metallurgy authorship changed. The document was revised during late 2013 to reflect progress since 2008.
Reference is made to Eureka Moly, LLC (EMLLC) as the Mount Hope Project owner throughout this document. EMLLC is a joint venture between General Moly, Inc. (GMI) (who owns an 80% share) and the POSCO subsidiary, POS-Minerals Corporation (who owns a 20% share). Prior to 2007, GMI was known as Idaho General Mines, Inc. (IGMI). Pursuant to a directive from the Company’s Board of Directors on October 4, 2007, IGMI was reincorporated and renamed. On October 9, 2007, the Company completed reincorporation in the state of Delaware and merged into GMI, with GMI being the surviving corporation.
The Mount Hope Project is located approximately 22 miles northwest of Eureka, Nevada. This Report encompasses the technical and economic development of open pit mining and processing of molybdenite (MoS2) sulfide ore. Over the project life of 41 years, the project will produce 1.2 billion saleable pounds of molybdenum as technical grade molybdenum oxide (TMO).
The Mount Hope deposit will be mined utilizing conventional open pit methods. Pre-stripping is planned to begin in 2014 with the first ore scheduled to the mill in 2016 Q3. Annual high-grade ore production from the mine is 24 million tons. During the first 10 years of operation, the mine will average 100 million tons per year of all material moved. Daily mill production will average 66,688 tons per day (24 million tons per year). Low-grade material between the mill cut-off and a breakeven cut-off is stockpiled for later processing primarily in years 35 through 41, with some low-grades ores supplementing the mill throughout the mine life. The operational stripping ratio over the first-five years is 3.0:1 (waste to ore). The life-of-mine stripping ratio is 1.7:1. The project includes mining up to final roasting of MoS2 to MoO3 and uses proven technologies.
In order to facilitate permitting and minimize environmental impacts, the environmental design integrates a lined tailing storage facility, low permeability liner under waste-rock storage areas that might generate acid rock drainage, lime gas scrubbing, dust controls, zero-discharge water management, and concurrent reclamation. The project has obtained all major permits.
Construction will commence once financing is complete. Currently, engineering is 65% complete and long-lead items, such as SAG mill, ball mills, and the main transformers have been
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purchased. The site is surrounded by established Nevada mining communities along the Carlin trend with an experienced mining labor force.
The execution plan is based on experience with the design and construction of similar projects. The plan is to achieve full production within the first-year of operations.
1.1 KEY DATA
Table 1-1 summarizes the key project data.
The financial analysis, for the base case metal price of $15 per pound molybdenum, provides an after tax NPV of $953 million at an 8% discount rate. The after tax IRR is 19.1% and the payback period is 4.1 years. The project is most sensitive to the market price. Section 22 of this Report provides more information on the assumptions and sensitivity analyses.
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Table 1-1: Summary of Key Project Data Open Pit Mine Life (years) 34 Milling of Low Grade stockpile (years) 7 Total Life (years) 41 Ore Density (SG) 2.53 Mine Type: Open Pit Process Description: Crushing, Grinding, Flotation, Concentrate Leaching, Thickening, Filtering, Roasting and Packaging Mill Throughput (Short tons per day) 66,688 Initial Capital Costs ($U.S. Millions) $1,246 Sustaining Capital Costs ($U.S. Millions) $786
Average Annual Payable Metals 5 yr 10 yr LOM Ore Grade, Mo % 0.092 0.086 0.070 Mill Recovery % 89.8 89.5 88.8 Leach and Roaster Recovery % 99.2 99.2 99.2 Molybdenum (millions of lbs) 40.1 37.2 28.9
Unit Operating Cost: Mining Cost per total ton material $1.06 $1.09 $1.44
Mining Cost per processed ore ton $4.25 $4.50 $3.91 Milling Cost per processed ore ton $4.59 $4.59 $4.60 Roaster Cost per processed ore ton $0.57 $0.53 $0.42 Laboratory Cost per processed ore ton $0.07 $0.07 $0.07 Site G&A Cost per processed ore ton $0.72 $0.71 $0.64 Shipping Cost per processed ore ton $0.15 $0.08 $0.02 Total cost per processed ore ton $10.35 $10.48 $9.65
Average Cost Per Pound Molybdenum: Operating Cost $6.28 $6.86 $7.90 Royalties Cost $0.72 $0.76 $0.80 Cost Applicable to Sales $7.00 $7.62 $8.70
Metals Price assumptions: Base Case Low Case High Case Molybdenum (price per pound) $15.00 $12.50 $17.50 After Tax Project IRR 19.1% 11.6% 25.3% After Tax NPV at 8% Discount Rate ($Millions) $953 $278 $1,589 Payback (years) 4.1 5.5 3.1
1.2 SUMMARY
This section provides a summary of the technical report for the Mount Hope Project prepared in accordance with NI 43-101. The proposed project encompasses the technical and economic development of an open pit mine to deliver molybdenite (MoS2) sulfide ore to a 66,688 t/d (short tons per day) grinding, flotation, and roasting facility. The project is located near Eureka, Nevada. Over a 41-year period, the project will produce 1.2 billion saleable pounds of molybdenum as technical grade molybdenum oxide (TMO).
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The development of the feasibility study incorporates several key strategies that are further developed herein. EMLLC provided the directive that mine planning maximize project return on investment while applying practical mine operational constraints. This effort resulted in molybdenum ore feed grades of 0.092% in the first five complete years. The payback period is 4.1 years based on a molybdenum price of $15 per pound. The mine life of 34 years and milling operation of 41 years provides socio-economic stability and a long-term revenue stream.
EMLLC selected third-party consultants that are well known, respected in the industry, and recognizable to the financial markets. These consultants performed the design, engineering, resource evaluations, and environmental studies used for this Report. All consultants have the capability to support the project, as required and within the confines of expertise, from feasibility study to full operation.
The project considers a vertically integrated process from mining to final roasting of MoS2 to MoO3. This allows the project to develop without the concern of potential financial impacts of constrained worldwide roasting capacity.
Proven technologies were selected in the design to minimize the risk to the project. The environmental design integrated the best available known technologies such as a lined tailing storage facility, low permeability liner under waste-rock storage areas that might generate acid rock drainage, lime gas scrubbing, dust controls, zero-discharge water management, and concurrent reclamation. This plan integrated accepted and proven environmental design to facilitate permitting and to minimize environmental impacts.
M3 Engineering & Technology (M3), and other EMLLC consultants, developed more than 3,000 drawings and have now completed approximately 65% of the design, which encompasses all aspects of the project. The advanced stage of design and procurement allows the project to proceed into construction once financing is secured.
The project execution plan and operational philosophy considers the attractive location, which has a balance of remoteness and close proximity to infrastructure. The site is surrounded by established Nevada mining communities along the Carlin trend with an experienced mining labor force numbering in the thousands.
The Mount Hope deposit will be mined utilizing conventional open pit methods. Pre-stripping is planned to begin in 2014 with the first ore scheduled to the mill in 2016 Q3. Annual high-grade ore production from the mine is 24 million tons. During the first 10 years of operation, the mine will average 100 million tons per year of all material moved. Daily mill production will average 66,688 tons per day (24 million tons per year). Low-grade material between the mill cut-off and a breakeven cut-off is stockpiled for later processing in years 35 through 41. The operational stripping ratio over the first-five years is 3.0:1 (waste to ore). The life-of-mine stripping ratio is 1.7:1.
The mining schedule advances the start of pre-stripping of the deposit 23 months ahead of the plant start-up to ensure sufficient ore is developed. This plan also develops 2 million tons of ore for stockpiling to assure ore availability for milling during the first year of operation.
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The execution plan encompasses a careful design with an experienced design team that has designed and built similar projects. The planning has carefully considered construction and commissioning to achieve full production within the first year of operations.
M3 authored this Report in their corporate office located in Tucson, Arizona. M3 relied upon contributions from the technical and engineering consultants, as well as from EMLLC. M3 has reviewed the work of the other contributors and considers the work to have been performed to normal and acceptable industry and professional standards.
Key findings are summarized in this feasibility study.
1.3 SCOPE
M3 prepared this feasibility study on behalf of EMLLC. The purpose and scope of this study was to prepare this Report on M3’s findings as to the economic and technical feasibility of the project. M3’s scope of work included:
1. Overall study report project management 2. Advanced detail design of 65% including equipment performance specifications and procurement progress of 35% overall 3. Development of drawings to describe the project and support the equipment and material takeoffs 4. Solicitation of budgetary equipment and material costs from vendors 5. Preparation of capital estimates 6. Review of operating cost estimates prepared by EMLLC 7. Review of the economic analysis performed by EMLLC 8. Review of metallurgical testing 9. Development of process flow sheets
EMLLC and its consultants developed:
1. Geological interpretation and mineral resource estimation 2. Ore tonnages and grades for reserve estimation 3. Mine plans, mine capital equipment, and operating cost estimates 4. Metallurgical testing to support process design and design criteria 5. Tailing deposition studies and design 6. Roaster and off-gas design 7. Environmental and reclamation studies and environmental permits 8. Land positions and ownership 9. Water supply and hydrogeological studies 10. Operating cost estimates 11. Economic and financial models
The general scope of the project includes:
1. Development of an open pit mine and primary crusher to prepare plant feed
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2. Design and construction of a 66,688 t/d SAG mill/ball mill grinding circuit 3. Design and construction of a molybdenum flotation plant 4. Design and construction of a filtering and ferric chloride leach plant 5. Design and construction of roasters and associated off-gas treatment equipment 6. Design and construction of infrastructure and ancillary facilities to support the project
1.4 RELIANCE ON OTHER EXPERTS
As principal author, M3 has relied upon the contributions of others in the preparation of the feasibility study. M3 has reviewed work by the contributing authors. In M3’s opinion, the work performed by these contributors has been professionally performed in accordance with normal standards for the mining industry. All consultants and design firms contributing to the report were selected based on their recognized competency and experience in the industry. M3 is not aware of any reason why the information provided by the contributors cannot be relied upon.
1.5 PROPERTY
Mineral rights are held by unpatented mining claims owned by EMLLC on Bureau of Land Management (BLM) land and leased patented and unpatented claims held by Mount Hope Mines, Inc. (MHMI). According to Federal law (30 USC 612), the purpose of an unpatented mining claim is for mineral prospecting, mining, or processing operations, and related uses, which include erecting and maintaining the necessary structures, workings, machinery, and security measures.
EMLLC currently has a 30-year lease of the MHMI claims for the Mount Hope Project renewable at EMLLC’s election. Located in Eureka County, Nevada, the Mount Hope Project consists of 13 patented lode claims, one patented mill site claim, and 1,521 unpatented lode claims. Total unpatented claims consist of 109 unpatented claims owned by MHMI and 1,412 unpatented claims owned by EMLLC.
1.6 OWNERSHIP
EMLLC is the sole owner or lessee of all minerals rights within the project limits. In 2004 IGMI/GMI entered into an Option to Lease MHMI’s 13 patented lode claims, one patented mill site claim, and 109 unpatented lode claims. These claims are located in Eureka County, Nevada. On October 19, 2005, IGMI/GMI exercised its option to lease such claims and entered into the Mount Hope Lease. Subsequently, the lease was assigned to EMLLC for a term of 30 years and renewable for so long thereafter as EMLLC is conducting operations on the property.
1.7 LOCATION
The Mount Hope Project is located roughly in the center of Eureka County, Nevada, approximately 22 miles northwest of Eureka. See Figure 1-1. The center of the proposed pit lies at Latitude 39.7933, Longitude -116.1858 (WGS 84), which is the same as 569,789 E, 4,404,987 N (UTM NAD 27, 11N). The land covers parts of Townships 21, 21½, 22 & 23 North and Ranges 51, 52, & 51½ East.
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Twin Creeks Midas Getchell
Pinson Wells Winnemucca Battle Elko Dee Mountain Meikle Interstate 80 Betze-Post Mount Hope Carlin Carlin East Project ELKO Gold Quarry Lone Tree CARLIN BATTLE MOUNTAIN Reno Marigold Rain Phoenix Mule Canyon Austin Eureka Ely
State Route 278 Tonopah Cortez Pipeline N
State Route 305 Bald Mountain Tonkin Springs
Alligator Ridge Gold Bar Idaho General Mines, Inc. Mount Hope 01632 Project Scale in Kilometers Mount Hope Project Ruby Hill Figure 1-1: Project Location 1.8 GEOLOGY
The Mount Hope deposit is classic molybdenum porphyry, typified by the deposit at Climax, Colorado. This type of deposit has well zoned molybdenum mineralization where the grade zoning surrounds the central zone of the deposit and forms geometries that are circular in plan and arch (inverted bowl) shaped in section. Mount Hope differs from Climax in that the multiple mineral centers are adjacent horizontally rather than juxtaposed over the same porphyry center.
The mineral zones or “shells” consist of quartz porphyry rocks that have been veined by quartz stockwork containing molybdenite. EMLLC is focused on the economic molybdenum mineralization in the deposit; however, there is other mineralization in the district such as tungsten, silver, gold, cadmium, indium, lead, zinc, and copper which are not currently found in economically minable quantities.
1.9 EXPLORATION STATUS
The majority of exploration activities for the Mount Hope Project were completed before EMLLC leased the property. Recent exploration performed by EMLLC includes drilling 90 holes at the Mount Hope Project, starting in 2005, for a total of 87,905 ft. Of this amount,
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31,906 ft has been core, and the remainder reverse circulation (RC) drilling divided amongst water exploration and development, exploration, condemnation, ore body infill and verification.
1.10 MINERALIZATION
The main form of molybdenum mineralization is molybdenite (MoS2). Molybdenite was formed within porphyritic igneous rocks and in the Vinini hornfels adjacent to the southern margin of the igneous rocks. Much of the known molybdenite is distributed around two dome shaped zones of mineralized stockworks. These inverted bowl shaped zones of molybdenum mineralization are developed symmetrically around two stocks of quartz porphyry. The eastern and western mineral systems each contain mineral shells at least 3,300 ft in diameter, and the two systems are centered about 2,300 ft apart along a west-northwest axis. Mineral shells consist of quartz porphyry rock, weakly to densely veined by quartz stockwork containing molybdenite.
1.11 MINERAL RESOURCES AND RESERVES
Telesto Nevada, Inc. (Telesto) developed a block model of the mineralization based on previous work by Independent Mining Consultants, Inc. (IMC) as input to the development of a mine plan. IMC has subsequently reviewed the Telesto model and John Marek of IMC is the Qualified Person for the statement of mineral resources and mineral reserves. Substantial effort went into the development of an economically optimized mine plan. The resulting total of all mineralization planned for processing constitutes the mineral reserve.
Table 1-2 summarizes the mineral reserves and Table 1-3 summarizes the mineral resources at Mount Hope pursuant to the guidelines of NI 43-101.
The total of proven and probable Mineral Reserves is the total of all ores planned for processing including the low-grade stockpile.
The Mineral Resource is that tonnage with a grade between 0.025% and 0.034% sulfide molybdenum and inferred material above 0.034% sulfide molybdenum contained within the planned pit. The mineral resource cut-off grade is 0.025% sulfide molybdenum, and 0.034% is the stockpile cut-off grade used for mine planning. The Mineral Resource is an addition to the reserve and not included within it.
The Qualified Person for the statement of mineral resources and mineral reserves is John Marek of IMC. In reviewing and verifying this statement of mineral resources and mineral reserves, the Qualified Person has not identified any unusual items of risk that would not be incurred in the development of any other base metal open pit within the United States.
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Table 1-2: Mineral Reserves Mineral Reserves Cutoff Tons Sulfide Classification Sulfide Mo X 1000 Mo %
Proven 0.034% 320,473 0.084 Probable 0.034% 664,129 0.063 Proven + Probable 0.034% 984,602 0.070
Table 1-3: Mineral Resources (Excluding Reserves) Mineral Resources in Addition to Reserves Cutoff Tons Sulfide Classification Sulfide Mo X 1000 Mo %
Measured 0.025% to 0.034% 12,976 0.033 Indicated 0.025% to 0.034% 52,267 0.033 Measured + Indicated 0.025% to 0.034% 65,243 0.033
Inferred 0.025% to 0.034% 11,945 0.031 +0.034% 99,316 0.059 Total Inferred +0.025% 111,261 0.056
Mineral Resources are in addition to and not contained in the Mineral Reserves Tons are dry short tons of 2,000 lbs Grades are Sulfide Molybdenum Percent by Weight
1.12 DEVELOPMENT AND OPERATIONS
1.12.1 Mining
The Mount Hope deposit will be mined utilizing conventional open pit methods. The mine plan is optimized to maximize project return on investment while applying practical mine operational constraints. This effort results in molybdenum ore feed grades of 0.092% for the first five years. Pre-stripping is planned to begin in 2014 with the first ore scheduled to the mill in 2016 Q3. Annual high-grade ore production from the mine during the first 20 years of mining is 24 million tons, total material moved averages 272,000 t/d (100 million t/y); with daily mill production averaging 66,688 t/d (24 million t/y). Low-grade material between the mill cut-off and a breakeven cut-off is stockpiled for later processing in years 35 through 41. The operational stripping ratio for the first five years is 3.0:1 (waste to ore) which includes the low-grade stockpile in the waste category. The life-of-mine stripping ratio is 1.7:1.
The mine equipment requirements were calculated based on the annual mine production schedule, the mine work schedule, and equipment shift production estimates. The size and type of mining equipment is consistent with the size of the project. The initial equipment fleet consists of electric shovels in the P&H 2800 class and a hydraulic shovel in the CAT 6060 class matched to haul trucks in the CAT 793 class. The primary crusher will be located adjacent to the
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final pit limits to minimize truck haul distances while optimizing relationship to the coarse ore stockpile and grinding mill.
1.12.2 Process Plant
The project will be vertically integrated from mining to final roasting of MoS2 to MoO3 thereby managing offsite transportation requirements. Only proven technologies will be employed in the design to minimize technical processing risk to the project. A concentrate leach process will be added to ensure metallurgical specifications are met. Operation of this circuit will not be necessary for most ore types to produce high-quality product.
1.12.3 Schedule
The execution of this project is subject to financing. A target date to restart construction is June 1, 2014. Critical paths are driven through project financing and delivery of long-lead equipment such as the roaster, roaster scrubber, rougher flotation cells, and mining shovels. The primary crusher, SAG mill, ball mills, and mill motors have been procured by EMLLC.
The Environmental Impact Statement (EIS) Record of Decision (ROD) from the BLM was received in 2012 Q4. The project major milestones are presented below.
Receive Project Financing 2014 Q2 Restart Construction 2014 Q2 Start Pre-Strip 2014 Q4 Startup 2016 Q3
Major assumptions include:
1. Sufficient financing will be in place by 2014 to procure long-lead items and support the schedule. 2. Engineering will resume 2014 Q2. 3. Contractor mobilization will occur with a sufficient portion of the financing received. 4. The pre-production will commence 23 months prior to the start-up. 5. The 24-month construction schedule (after fresh water is available) requires that a general construction contractor provide sufficient skilled labor on site to meet this schedule and the labor market is not overly stressed to provide this labor. 6. Temporary power generation will be used for a portion of the pre-production mining period. 7. Sufficient fresh water will be developed locally for construction or will be transported to the site for construction and dust control.
1.13 AUTHORS’ CONCLUSIONS
The main conclusions of this study are as follows:
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The results of the feasibility study and advanced-stage design indicate that the Mount Hope Project is technically feasible. The mining and process methods are typical and do not require any specialized technology. Project economics are favorable. The economic base-case analysis results in a 19.1% IRR and $953 million NPV and is most sensitive to molybdenum price. The base case assumes a flat molybdenum price of $15/lb. Price sensitivity was also performed covering a range of constant molybdenum prices. In a sensitivity range studied of $12.50/lb. to $17.50/lb. economics are favorable. M3 concludes that the capital costs are reasonable. The capital costs are comparable to like-sized projects. The project location is fortuitous in that it is situated in the middle of the Nevada mining district and is within 1.5 miles of a paved highway, near a 230 kV electrical substation, and with sustainable ground water resources. The climate is moderate and the mill and tailing site locations are on a reasonable and constructible site. The water rights for the project have been acquired. Additionally, a public airport capable of landing business jet aircraft is within 10 miles of Mount Hope. EMLLC has obtained all major permits required for construction start and will soon obtain other minor construction and operating permits for the project as necessary. Of most note, EMLLC obtained the Record of Decision on the EIS during November 2012. The project schedule is reasonable, but requires some advance procurement in the first half of 2014, prior to full funding to support the completion of the Project schedule. Procurement of the primary crusher, ball mills, and SAG mill is complete. Procurement of the flotation cells, roaster scrubber, and mining equipment is well advanced.
1.14 RECOMMENDATIONS
M3 recommends the development of the Mount Hope Project. Financing and procurement are on the critical path to completion. M3 recommends continued effort on those activities.
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2 INTRODUCTION
2.1 PURPOSE
This document was prepared in order to provide a technical evaluation consistent in format with the NI 43-101 standard and to present data and information developed to substantiate technical and economic viability of the Mount Hope Project in Eureka County, Nevada.
This Report was prepared by M3 Engineering & Technology Corporation (M3) at the request of EMLLC:
Eureka Moly, LLC 1726 Cole Boulevard, Suite 115 Lakewood, CO 80401
Phone: (303) 928-8599 (USA) Fax: (303) 928-8598 (USA)
2.2 SOURCES OF INFORMATION
This Report is based in part on internal company technical reports, previous feasibility studies, maps, published government reports, company letters and memoranda, and public information as listed in the references section at the conclusion of this Report.
2.3 QUALIFIED PERSONS AND SITE VISITS
The Qualified Persons responsible for this Report are as follows:
Table 2-1: List of Qualified Persons
Author Company Designation Site Visit Section Responsibility Sections 1, 2, 3, 4, 5, 6, 19, 21, Conrad E. Huss M3 P.E. N/A 22, 25, 26, and 27 Robert Davidson M3 P.E. May 2013 Sections 18, 23, and 24
Art S. Ibrado M3 Ph.D. July 2008 Sections 1, 13, 17, and 25
Daniel Roth M3 P.E. N/A Section 20 Sections 1, 7, 8, 9, 10, 11, 12, 14, John Marek IMC P.E. August 2005 15, 16, 21, and 25
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2.4 TERMS OF REFERENCE AND UNITS OF MEASURE
The important acronyms and terms used in this Report are presented as follows.
A.A.: Atomic Absorption ESA: Endangered Species Act ABA: Acid-base accounting Exxon: Exxon Minerals Company ADR: Adsorption, Desorption and Refining FCC: Federal Communications Commission afa: acre-feet annually FEIS: Final Environmental Impact Statement Ag: Silver FLS: FLSmidth AMC: Antecedent Moisture Condition G & A: General and Administrative ARD: Acid Rock Drainage GMI: General Moly, Inc. ASTM: American Society for Testing and gpm: Gallons per minute Materials HDPE: High-density polyethylene Au: Gold HLP: Heap leach pad BAPC: Bureau of Air Pollution Control HMI: Human machine interfaces BATF: Bureau of Alcohol, Tobacco and HOA: Hand-off-auto Firearms I.D.: Inside diameter BLM: United States Bureau of Land IBC: International Building Code Management IGMI: Idaho General Mines, Inc. BMRR: Bureau of Mining Regulation and IMC: Independent Mining Consultant, Inc. Reclamation Krebs: Krebs Engineers BWPC: Bureau of Water Pollution Control kt: Kilo tons = 1,000 tons CAA: Clean Air Act kV: Kilovolts = 1,000 volts CAGR: compound annual growth rate kVA: Kilovolt Ampere = 1,000 volt-amperes CCI: Construction Cost Index KVR: Kobeh Valley Ranches, LLC CEET: Comminution Economic Evaluation Tool kWh: Kilowatt-hour = 1,000 watt-hours CEMS: Continuous emissions monitoring LCRS: Leachate Collection and Removal system System Cash Cost: Costs associated with mining, LLDPE: Linear Low Density Polyethylene milling, flotation, roasting, and site general and LTFM: Long-term funding mechanism administration cost to obtain a marketable M3: M3 Engineering and Technology technical grade molybdenum oxide Corperation CEQ: Council on Environmental Quality MCC: Motor Control Center CIM: Canadian Institute of Mining, Metallurgy MCE: maximum credible earthquake and Petroleum MCP: Motor Circuit Protector cf: cubic foot or cubic feet MDB&M: Mount Diablo Base and Meridian cfm: cubic feet per minute MHMI: Mount Hope Mines, Inc. CFO: Chief Financial Officer moly: Abbreviation of molybdenum CIC: Carbon-in-Column MSHA: U.S. Department of Labor Mine Safety CPE: corrugated polyethylene and Health Administration C.P.G.: Certified Professional Geologist MSRDI: Mountain States Research & CPT: Corrugated polyethylene tubing Development, Inc. Cu: Copper MVA: Megavolt Ampere = 1,000,000 volt- CWA: Clean Water Act amperes DEIS: Draft Environmental Impact Statement MWMP: Meteoric Water Mobility Procedure EA: Environmental Assessment NAAQS: National Ambient Air Quality Standard EIA: Energy Information Administration NAC: Nevada Administrative Code EIS: Environmental Impact Statement NaCN: Sodium cyanide EMLLC: Eureka Moly, LLC NAG: waste rock that is non-acid generating ENR: Engineering News Record NAGPRA: Native American Graves Protection EPC: Engineering, procurement, and and Repatriation Act construction NDEP: Nevada Division of Environmental EPCM: Engineering, procurement, and Protection construction management NDOT: Nevada Department of Transportation
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NDOW: Nevada Department of Wildlife RC: Reverse circulation NEPA: National Environmental Policy Act RCE: Reclamation cost estimate NFPA: National Fire Protection Association RMGC: Rocky Mountain Geochemical NFS: National Forest System ROD: Record of Decision NHPA: National Historic Preservation Act ROM: Run-of-mine NI 43-101: Canadian National Instrument 43- RoW: Right of way 101 RTU: Remote terminal unit NMLLC: Nevada Moly, LLC SABC: grinding circuit with one SAG mill and NNHP: Nevada Natural Heritage Program two ball mills NOI: Notice of Intent SAG: Semi-Autogenous Grinding Mill NPDES: National Pollutant Discharge sf: Square foot or square feet Elimination System SGS: SGS Lakefield Limited NRS: Nevada Revised Statutes SHPO: Nevada State Historical Preservation NSR: Net smelter return Office opt: Troy ounces per short ton SPCC: Spill Prevention, Control, and oz: Troy ounces Countermeasure PAG: waste rock that is potentially acid SRCE: Nevada Standardized Reclamation Cost generating Estimator pcf: Pound-force per Cubic Foot (unit of SUP: Special Use Permit material density) SWPPP: Storm Water Pollution Prevention Plan PCMS: Process component monitoring system TMO: Technical grade molybdenum oxide P.E.: Professional Engineer TQP: Tertiary Quartz Porphyry PHGA: earthquake peak horizontal ground TSF: Tailings storage facility accelerations ton: Dry short ton of 2,000 pounds PHMSA: US Department of Transportation T: Metric ton = tonne = 1,000 kg Pipeline and Hazardous Materials Safety t/d or tpd: Short tons per day Administration µm: micron PLC: Programmable logic controller USD: U.S. Dollars POD: Plan of Development USBM: United States Bureau of Mines POO: Plan of Operations USFS: United States Forest Service ppb: Parts per billion USFWS: United States Fish and Wildlife ppm: Parts per million Service PMF: Probable Maximum Flood WIP: Work in progress psi: Per square inch WPCP: Water Pollution Control Permit QA/QC: Quality Assurance and Quality Control WRMP: Waste rock management plan
This Report uses English units expressed in short tons (2,000 pounds), feet, and gallons consistent with U.S. standards. The monetary units are expressed in U.S. Dollars. Some metric units using the SI system are presented for clarity where necessary.
1 ounce (oz) [troy] = 31.1034768 grams (g) 1 short ton = 0.90718474 metric tonnes 1 troy ounce per short ton = 34.2857 grams per metric tonne = 34.2857 ppm 1 gram per metric tonne = 0.0292 troy ounces per short ton
1 foot (ft) = 0.3048 meters (m) 1 mile (mi) = 1.6093 kilometers (km) = 5280 feet 1 meter = 39.370 inches (in) = 3.28083 feet 1 kilometer = 0.621371 miles = 3280 feet
1 acre (ac) = 0.4047 hectares
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1 square kilometer (sq km) = 247.1 acres = 100 hectares = 0.3861 square miles 1 square miles (sq mi) = 640 acres = 258.99 hectares = 2.59 square kilometers
Degrees Fahrenheit (oF) – 32 x 5/9 = Degrees Celsius (oC)
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3 RELIANCE ON OTHER EXPERTS
M3 relied upon contributions from a range of technical and engineering consultants as well as EMLLC. In conclusion, M3 has reviewed the work of the other contributors and finds this work has been performed to normal and acceptable industry and professional standards. M3 is not aware of any reason why the information provided by these contributors cannot be relied upon.
Copies of the licenses, permits and work contracts were reviewed. However, an independent verification of land title and tenure was not performed. M3 has not verified the legality of any underlying agreement(s) that may exist concerning the licenses or other agreement(s) between third parties. Likewise, EMLLC has provided data for and verified water rights, land ownership, and claim ownership.
A draft copy of the report has been reviewed for factual content by EMLLC. Any changes made as a result of these reviews did not involve any alteration to the conclusions.
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4 PROPERTY DESCRIPTION AND LOCATION
The Mount Hope Project is located roughly in the center of Eureka County, Nevada, USA. The center of the proposed pit lies at Latitude 39.7933, Longitude -116.1858 (WGS 84), which is the same as 569,789 E, 4,404,987 N (UTM NAD 27, 11N). The land covers parts of Townships 21, 21½, 22 & 23 North and Ranges 51, 52, & 51½ East. See Figure 4-1.
Twin Creeks Midas Getchell Pinson Wells Winnemucca Battle Elko Dee Mountain Interstate 80 Meikle Mount Hope Betze-Post Carlin Carlin East Project ELKO Gold Quarry Lone Tree CARLIN BATTLE MOUNTAIN Reno Marigold Rain Phoenix Mule Canyon Austin Eureka Ely
State Route 278 Tonopah Cortez Pipeline N
State Route 305 Bald Mountain Tonkin Springs
Alligator Ridge Gold Bar Mount Hope Mount Hope 016 32 Scale in Kilometers Project Project Ruby Hill
Figure 4-1: Property Map
4.1 CLAIMS
Including the claims leased from MHMI, the Mount Hope Project consists of a total of 1,535 claims. These include 13 patented mining claims, one patented mill site claim, and 1,521 unpatented claims. Of the 1,521 total unpatented claims, 109 are owned by MHMI, and 1,412 are owned by EMLLC. See Figure 4-2. Of the 1,412 owned claims, 572 claims lie outside of the plan of operations boundary but are contiguous to the claims within. Of those, 49 WW claims west of the project area are located in Kobeh Valley. See Figure 4-3 for the well field claims.
These claims are located in sections 25, 26, 35, 36, T23N-R51E; sections 31, 32, 33, 34, T23N- R52E; sections 12, 13, 21, 22, 26, 27, 28, 29, 30, 31, 33, 35, T22N-R50E; sections 1, 2, 3, 10, 11, 12, 13, 14, 15, 20, 21, 22, 23, 24, 25, 26, 27, 29, 30, 32, 36, T22N-R51E; sections 1, 12, 13, 24, 25, 36, T22N-R51½E; sections 3, 4, 5, 6, 7, 8, 9, 10, 15, 16, 17, 18, 19, 20, 21, 22, 27, 28, 29, 30, 31, 32, 33, T22N-R52E; section 1, T21½N-R51½E; sections 4, 5, 6, T21½N-R52E; sections 2, 3, T21N-R50E; sections 1, 12, T21N-R51E; sections 4, 5, 6, 7, 8, 9, 16, 17, 18, 19, 20, 21 T21N-
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R52E. Total surface area covered is approximately 29,087.0 Ac (11,771.1 ha). See Figure 4-2, Mine Claim Map, and Figure 4-3, Well Field Claim Map.
Patented claims are listed in Table 4-1, and main project area unpatented claims are listed by quantities and ownership in Table 4-2. EMLLC owns 572 additional claims in close proximity to the area which may be used in the future. These are shown in Table 4-3.
Table 4-1: Patented Claims
Claim Name Patent No. Good Hope 10386 Parallel 1072536 Parallel Extension 1072536 Magnolia 1072536 Dixon No. 1 1072536 Dixon No. 2 1072536 Lorraine 1072536 Lorraine No. 1 1072536 Lorraine No. 2 1072536 Silver Butte 1072536 Silver Butte No. 1 1072536 Silver Butte No. 2 1072536 San Juan Chief 1072536 Good Hope (mill site) 10386 Total 14
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Table 4-2: Unpatented Claims in the Project Area (Plan of Operations Boundary)
Claim Name MHMI EMLLC Hope 40 48 Bowser 47 40 Lookout 3 - West Incline 3 - Hop 2 - TIA 14 - ND - 54 SD - 108 WC - 55 ET - 151 NET - 2 TSF2 - 380 VM - 2 Total 109 840
Table 4-3: Unpatented Claims outside Project Area (Well Field & Area Adjacent to TSF)
Claim Name (All EMLLC) Number
ET 83 NET 129 TSF2 187 NWD 33 NEX 91 WW 49 Total 572
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Figure 4-2: Mine Claim Map
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Figure 4-3: Well Field Claim Map
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4.2 OWNERSHIP
The following discussion has been provided by EMLLC. Land ownership is a combination of Federal lands administered by the BLM and private property owned by MHMI. EMLLC currently has a lease from MHMI for the Mount Hope Project for a term of 30 years, which is thereafter renewable for so long as EMLLC is conducting operations on the property.
The Mount Hope Lease is subject to the payment of certain royalties. In addition to the royalty payments, EMLLC is obliged to maintain the property and any associated water rights, including the payment of all property taxes and claim maintenance fees. EMLLC must also indemnify MHMI against all losses incurred as a result of any breach or failure by EMLLC to satisfy any of the terms of the Mount Hope Lease or any activities or operations on the Mount Hope property.
EMLLC is not permitted to assign or otherwise convey EMLLC’s obligations under the Mount Hope Lease to a third party without the prior written consent of MHMI, whose consent may be withheld in its sole discretion. However, if the assignment takes the form of a pledge of EMLLC’s interest in the Mount Hope property for the purpose of obtaining financing for the Mount Hope Project, MHMI’s consent may not be unreasonably withheld. The Mount Hope Lease further provides that EMLLC is to keep the property free and clear of all liens, encumbrances, claims, charges, and burdens on production, including if and when EMLLC obtains project financing.
With respect to project financing, the Mount Hope Lease provides that the terms of such financing must stipulate that: (i) any principal amount of debt can only be repaid after EMLLC has paid all of the periodic payments as set out in the Mount Hope Lease; (ii) the lenders may not prohibit or interfere with any advance royalty payments due to MHMI under the Mount Hope Lease; and (iii) no cash sweeps or payments of excess cash flow may be made to the lenders in priority of such advance royalty payments.
The Mount Hope Lease also contains an after acquired property clause, which provides that any property acquired by EMLLC within two miles of the boundary of the Mount Hope property must be conveyed to MHMI if requested within a certain time period following notification of such acquisition. MHMI has requested that for the meanwhile EMLLC maintain ownership of all new claims filed by EMLLC. This now includes 1,412 unpatented mineral claims, all of which are subject to royalty obligations with MHMI.
The Mount Hope Lease may be terminated upon the expiration of its 30-year term (provided operations have been discontinued), earlier at EMLLC’s election, or upon EMLLC’s material breach and failure to cure such breach. If EMLLC terminates the lease, termination is effective 30 days after MHMI receives EMLLC’s written notice to terminate the Mount Hope Lease. If MHMI terminates the lease, termination is effective upon EMLLC’s receipt of a notice of termination based on a material breach of a representation, warranty, covenant, or term contained in the Mount Hope Lease and the failure to cure such breach, or commence curative action of such breach, within 90 days of receipt of a notice of default. MHMI may also elect to terminate the Mount Hope Lease if EMLLC has not cured the non-payment of EMLLC’s obligations under
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such lease within 10 days of receipt of a notice of default. Provisions for arbitration of disputes are set forth in the lease.
4.2.1 Grazing Allotments and Agricultural Use
The project lies within the Romano Grazing Allotments and Roberts Mountain Grazing Allotments on BLM land. Grazing rights within the property boundaries were held by two local ranchers. The Romano Grazing Allotments were owned by Art and Frances Gale prior to the purchase of the Gale Ranch by GMI, as referenced below. The Roberts Creek Grazing Allotments are owned by Diamond Cattle Co., LLC.
On July 19, 2006, GMI purchased the ranch and associated water rights from Art and Frances Gale of Eureka, Nevada (the “Gale Ranch Purchase”). The Gale Ranch Purchase includes 1,503 acres of deeded land 8 miles from the Mount Hope property, 70,000 acres of BLM grazing rights called the Romano Allotment (which overlaps the Mount Hope property), and certain ground water and stock water rights associated with the grazing land and the deeded land.
4.2.2 Survey of Property
EMLLC has had the property surveyed by a licensed land surveyor.
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4.2.3 Location Map
Figure 4-4: Overall Site Plan
4.3 ROYALTIES, AGREEMENTS, AND ENCUMBRANCES
Under the Mount Hope Lease, EMLLC will have the following royalty and other payment obligations:
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4.3.1 Advance Royalty
EMLLC is required to pay MHMI various advanced royalties and royalty deferral fees. As of December 31, 2013, EMLLC had paid $23,100,000. EMLLC anticipates paying another $3,400,000 during 2014-2016. All Advance Royalties are credited against the MHMI Production Royalties once the mine has achieved commercial production. The economic analysis includes these payments.
Beginning on October 19, 2013 EMLLC began paying minimum annual advance royalty payments of $500,000 per year to MHMI. Such payments are required for any year wherein commercial production has not been achieved, and are included in the $3,400,000 referenced above.
4.3.2 Production Royalty
Following commencement of commercial production, EMLLC will be required to pay a production royalty to MHMI and Exxon Corporation (Exxon), as follows:
4.3.2.1 MHMI Production Royalty
After commencement of commercial production at the Mount Hope Project, EMLLC will be required to pay to MHMI a production royalty equal to the greater of: (i) $0.25 per pound of molybdenum metal (or the equivalent of some other product) sold or deemed to be sold from the Mount Hope Project; or (ii) 3.5% of net returns (the “Base Percentage”), if the average gross value of products sold is equal to or lower than $12.00 per pound, or the Base Percentage plus 1% of net returns if the average gross value of products sold is higher than $12.00 per pound but equal or lower than $15.00 per pound, or the Base Percentage plus 1.5% of net returns if the average gross value of products sold is higher than $15.00 per pound. The term “products” refers to ores, concentrates, minerals, or other material removed and sold (or deemed to be sold) from the Mount Hope Project; the term “gross value” refers generally to proceeds received by the company or the company’s affiliates for the products sold (or deemed to be sold); and the term “net returns” refers to the gross value of all products, less certain direct out of pocket costs, charges and expenses actually paid or incurred by the company in producing the products.
4.3.2.2 Exxon Production Royalty
Exxon will receive a perpetual 1% royalty interest in and to all ores, metals, minerals and metallic substances mineable or recoverable from the Mount Hope Project in kind at the mine or may elect to receive cash payment equal to 1% of the total amount of gross payments received from the purchaser of ores mined/removed/sold from property net of certain deductions.
4.3.3 Encumbrances
There are no encumbrances on the Mount Hope property.
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4.4 ENVIRONMENTAL AND PERMITTING CONSIDERATIONS
Pre-existing environmental liabilities at the Mount Hope site are minimal and associated with historic underground mining operations. Three specific environmental issues have been identified, two of which have been mitigated.
Tailings from previous milling operations totaling approximately 25,000 cubic yards (Mount Hope Final Environmental Impact Statement or “FEIS”) were deposited in four small impoundments down gradient from the old Mount Hope mill. These tailings were geochemically tested during the baseline environmental studies conducted for the EIS, and do not have the potential to degrade waters of the State (Mount Hope FEIS). Per the approved Plan of Operations (POO), these tailings will be re-characterized using the Meteoric Water Mobility Procedure (MWMP) to confirm previous results, then removed and placed in the lined South TSF impoundment.
Abandoned underground workings at the site provided habitat for bats in the area, but also posed a potential public safety hazard. EMLLC has completed securing of these workings in accordance with the Mitigation Strategy for Protecting Important Roosting Colonies of Townsend’s Big-ear Bats at the Mt Hope Mine by Eureka Moly, LLC in the approved POO. All workings were either filled or plugged with earth to prevent human access, or equipped with bat gates. Bat gates preclude human access while still allowing bats to enter and inhabit the workings.
Buildings, equipment and debris from historic mining and milling operations are present at the site. The historic milling facility has been cleaned up by EMLLC. All reagents, chemicals and petroleum products were evaluated and disposed in accordance with applicable regulations. Debris was removed offsite, with some of the wood debris being burned on site. Remaining materials include the core shed and storage buildings which are still in use, as well as some buildings or portions thereof, and very minor amounts of miscellaneous equipment, none of which present an environmental liability.
The proposed Mount Hope Project falls under federal and state, agency purviews with respect to environmental permits and approvals. The majority of the Project will be located on public land administered by the BLM according to the Shoshone-Eureka Resource Management Plan (BLM 1983) and pursuant to applicable sections of the federal regulations published in 43 CFR. Surface mining regulations (43 CFR 3809.11) require that mining projects located partially or entirely on public lands administered by the BLM have a POO approved by the BLM. Because POO approval constitutes a “major federal action” as defined by the National Environmental Policy Act (NEPA) and the Council on Environmental Quality (CEQ) regulations, the proposed Project triggered the NEPA review process.
In September 2006, the Mount Hope Mine Plan of Operations and Reclamation Permit Application were submitted to the BLM, which was determined to be complete in accordance with 43 CFR 3809.401 in October 2006. The BLM determined that an EIS was the appropriate level of analysis for the NEPA review process. In January of 2008, a Plan of Development (POD) for a long-term right-of-way, and later a second POD for a short term (construction) right-
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of-way, for a 230-kilovolt transmission line from the Machacek Substation to the Project substation located near the proposed mill were also submitted.
A Draft EIS (DEIS) disclosing the proposed POO and PODs, and analyzing the environmental impacts of construction and operation of these facilities, was published on December 2, 2011. A public comment period on the DEIS extended through March 2, 2012. Over 1,900 comments were received from 941 separate parties. All comments received during the public comment period were considered by BLM in preparing a Final EIS, which was published on October 12, 2012. On November 16, 2012, BLM issued a Record of Decision (ROD) approving the POO and PODs. The ROD is the subject of an appeal to the U.S. District Court, District of Nevada, Case Number 3:13-cv-78-RCJ, assigned to Judge Robert C. Jones.
Resources that were evaluated in the EIS include air quality, water quality, water quantity, wildlife, fisheries, threatened and endangered species, socioeconomics, soils, vegetation, range resources, wetlands, visual resources, recreation, noise, historic trails, cultural resources, and Native American concerns.
The Mount Hope EIS, over a period of six years, thoroughly analyzed potential impacts of the POO on all environmental resources. Based on this review, mitigation plans were developed for some resources to minimize impacts. For other resources, BLM’s resource specialists concluded that the project as designed would not result in significant environmental impacts. Based on this thorough agency-managed analysis and mitigation plan development, potential for environmental liability resulting from construction and operation of the Mount Hope Project as designed and permitted is substantially reduced.
In addition to the EIS, EMLLC has obtained the environmental permits required to construct the mine as well as some of the permits that are required to operate the mine. Table 4-4 summarizes these permits and approvals and the time at which they were issued.
Table 4-4: Permits Issued PERMIT / APPROVAL / GRANTING ISSUANCE PROJECT AGENCY DESCRIPTION PERMIT # DATE FEDERAL PERMITS 1 Plan of Operations/EIS/Record BLM Plan of Operations NVN-082096 16-Nov-12 of Decision (POO). NVN-084632 NVN-091272 2 RoW for 230 kV Transmission BLM RoW - transmission NVN-84632 16-Nov-12 Line line from Machacek NVN-91272 Substation to Plan of Ops. boundary. 3 RoW Assignment for Existing BLM RoW - existing power N-012655 10-Jun-09 Power line transmission line. 4 RoW for Communications BLM RoW - N-84298 27-Mar-08 Tower communications tower (repeater). 5 Radio Frequency Authorization FCC Permit to operate two 0016664757 13-Nov-07 way radios at Mount Hope.
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PERMIT / APPROVAL / GRANTING ISSUANCE PROJECT AGENCY DESCRIPTION PERMIT # DATE 6 Explosives Permit BATF Permit to store and use 9-NV-011-20- 6-Sep-12 blasting materials. 5K-00318 7 Hazardous Waste ID Number EPA/NDEP Tracking number for NVR 1-Apr-10 solid and hazardous 000081349 wastes. 8 Hazardous Materials USDOT-PHMSA Registration for 083011 550 30-Aug-11 Registration Number transport of hazardous 014TV materials. STATE PERMITS 9 Water Pollution Control Permit NDEP - Bureau of Permit for NV2008106 21-Nov-12 Mining Regulation management of and Reclamation solution associated with "process facilities". 10 Air Quality Permit NDEP - Bureau of Permit to operate air AP1061-2469 29-May-12 Air Pollution pollutant emission Control generating equipment. 11 Reclamation Permit NDEP - Bureau of Permit (with bonding 0330 19-Nov-12 Mining Regulation requirement) to create and Reclamation and reclaim mine- related surface disturbance. 12 Permit to Construct Nevada Division of Permit to construct J-653 25-Oct-10 Impoundments - Tailing Dam Water Resources dam. J-623 and Underdrain Pond (Dam Safety Permit) 13 Notice of Intent to Construct NDWR NOIC NA Completed Impoundment (NOIC) - Ames Construction Water Ponds (5) 14 Septic System Permit NDEP - Bureau of Permit for existing GNEVOSDS09 13-Jun-07 Water Pollution Core Shed septic S0248 Control system. 15 Solid Waste Class III Waivered NDEP - Bureau of Permit for onsite solid F536 22-Aug-12 Landfill Permit Solid Waste waste landfill. 16 UEPA Permit Nevada Public Permit for the UEPA No. 401 24-Dec-12 Utilities construction of Commission electric transmission lines over 200 kV. 17 Encroachment Permit Nevada Department Permit for turn and 201593 29-May-13 of Transportation acceleration lanes at State Highway 278 for mine access. 18 230 kV Transmission Line Nevada Department Permits for 2 crossings 201080 2-Oct-12 Encroachment Permit of Transportation on Hwy 50 associated 201088 with 230 kV line construction. 19 Water Appropriations Nevada Division of Permits to use water Various granted 15-Jul-11 Water Resources for mining and in Ruling 6127 mineral processing.
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A further discussion of environmental and permitting issues is located in Section 20 of this document.
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5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
The Mount Hope site is accessible from Highway 278 that runs between Carlin, Nevada and the Eureka. The mine site is located approximately 22 miles northwest of Eureka primarily in Diamond Valley with the tailing storage facilities located in Kobeh Valley. Highway 278 is a two-lane highway with low traffic volume. Rail facilities are located 92 miles north of the Mount Hope site in Elko, NV.
The Project is located within the Basin and Range physiographic province, which is characterized by broad valleys separated by mountain ranges that generally trend north and south. Elevations range from about 6,400 ft above mean sea level (amsl) in Kobeh Valley to over 8,400 ft amsl at the top of Mount Hope. Vegetation in the vicinity of the Project ranges from piñon and juniper to uplands containing grasses such as basin wild rye and big sagebrush.
Block faulting in the area has resulted in generally north-south trending topography. Structural deformation has resulted in a series of valleys separated by mountain ranges. The three valleys of hydrologic interest are located primarily within Eureka County and include Diamond, Kobeh, and Pine Valleys. A majority of Mount Hope drains to the east and south into Diamond Valley. Except for a small area on the northwest flank of the mountain, the remainder drains to the west and south into Kobeh Valley. A small portion of the project is located within Pine Valley.
Climate in the area is moderate, with average highs in July of about 86°F and lows in January of about 17°F. Precipitation in the area is relatively low, with annual rainfall averaging about 12 inches.
Eureka County is the second least populous county in Nevada with a 2012 estimated population of 2,001 and a 2012 resident population density of 0.5 persons per square mile. The unincorporated town of Eureka, the county seat and largest community in the county, is located in the southern portion of the county. The economy of Eureka County is natural resource-based. Mining, farming, ranching, and tourism and recreation rely on the land and associated resources.
Currently there is a mining labor shortage in Eureka County and in northeastern Nevada in general. Unemployment rates in 2006 were as low as 4.4%, but have risen to 9.3% in 2013. The population of Eureka has been largely linked to mining. The Mount Hope Project is expected to generate approximately 400 direct mining related jobs and 150 indirect jobs in the area. The primary workforce will be recruited from the local area, with the majority of workers within 150 miles of the Mount Hope site. Significant planning will be required to recruit and train the Mount Hope workforce prior to operation. Mining activities will be conducted year round.
Permanent and temporary housing in Eureka County is limited. The general inventory of available housing is far short of the anticipated population growth. Development of new housing for employees in the area would be advantageous, but construction and operations employees will also be bused to the site. Approximately 170 acres of land north of Eureka were annexed by Eureka County where Eureka County has partnered with Nevada Rural Housing Development and initiated development of single family and multi-family dwellings (apartments). In addition,
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EMLLC has purchased parcels of land that are 132 and 34 acres. EMLLC intends to develop a recreational vehicle (RV) park on the smaller parcel to provide housing for construction workers. The RV park would also be available for operational employees and could be an attractive option for employees new to the area who are transitioning to more permanent housing. Depending on demand, the larger property would be used for housing for operations employees.
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6 HISTORY
Documented mining in the Mount Hope area began as early as the Nineteenth Century, when prospectors discovered zinc-lead ores in the 1870s. A timeline of historical activities in the Mount Hope vicinity is summarized in Table 6-1. This led to sporadic mining operations for these materials through the early 1970s. During World War II, the United States Bureau of Mines (USBM) defined approximately 176,000 metric tons of ore with a 9.9% zinc grading. Phillips Petroleum focused on drilling for zinc and copper in adjacent areas during the early 1970s, and ASARCO and Gulf Oil Corporation continued studying the same minerals through the mid-1970s. Phillips drilling defined approximately 290,000 metric tons of ore with a grade of 6% zinc. Additionally, the last hole drilled by that company resulted in the discovery of a significant deep molybdenum deposit west of the zinc mineralization. In 1976, ASARCO recognized the deposit’s mining potential, but was unable to reach an agreement with MHMI to develop this potential.
Exxon was the next company to explore the potential for mining molybdenum in the area. Exxon acquired an option for the property from MHMI in 1978, and by 1982, the company had drilled 69 holes, which helped to better define the molybdenum deposit on the eastern side of Mount Hope. Exxon completed a pre-feasibility study on the deposit in 1983, which included ore reserve modeling, mine planning, metallurgical testing, engineering, and capital and operating cost estimation. The study estimated minable material of 672 million metric tons of 0.085% molybdenum at a 3.0 to 1.0 waste to ore ratio. Exxon’s operating plan suggested a 10.9 million tonne annual ore production rate over a 58-year period. The company completed a draft EIS and held public hearings in early 1985. Exxon drilled an additional 60 holes on the property between 1983 and 1988, but did not update their ore reserve model with data from these holes.
Exxon later made agreements with other companies to allow them to continue studying the area. Cyprus, for example, drilled four more holes in 1989 through 1990, and Kennecott Exploration made an agreement in 1995, which resulted in Kennecott’s purchase of the prospect on April 30, 1996. Kennecott did not drill any new holes on the property, relying instead on Exxon’s extensive historical data and studies to conduct economical evaluations of the molybdenum deposit. Kennecott used Davey McKee cost estimates to create the study. Kennecott developed a mine design and mining schedule to mine and process 888 million tons of ore grading 0.072% Mo from an open pit mine. Kennecott estimated the mine would produce 1.088 billion pounds of Mo based on an overall recovery rate of 88% during the 35-year mine life. At the time, Kennecott did not exercise any further options on the property.
In 2004, IGMI optioned the Mount Hope Project. IGMI worked with Independent Mine Consultants (IMC) to further review and develop the data from previous studies. IMC used the Kennecott database for their analysis of the deposit. IMC also inspected and audited the extensive drill core, which then was stored on site.
IGMI completed a preliminary mine feasibility study in April 2005 primarily based on Exxon study materials for the purpose of evaluating the value in exercising the long term option to lease the Mount Hope Project. This study outlined the economics and capital cost estimates for development of the project and produced a preliminary mine plan. Based on the results of the
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feasibility study, IGMI exercised an option to lease the property in October 2005 and entered into the Mount Hope Lease with MHMI. Subsequently, IGMI accomplished a detailed mine feasibility study in December 2005, which verified existing drill hole data and refined the block model and mine plan.
In 2006, IGMI initiated the baseline studies necessary for the development of an EIS. The POO was accepted by the Battle Mountain office of the BLM in September 2006. In December 2006, the BLM selected an environmental firm to complete the EIS for the Mount Hope Project.
M3 was retained by IGMI in January 2007 to develop the feasibility study. M3 Engineering worked actively on the project through April 2009, taking the detailed design to 60% complete. During March 2009, EMLLC instructed M3 to phase out active engineering, as the company reacted to the economic recession of 2008-2009 and the EIS permit was delayed. At a moderate pace, EMLLC resumed engineering during January of 2012, anticipating permits and financing by the end of the year. Pre-construction efforts on the fresh water line, cultural clearance and site clearing began in January 2013. During March 2013, EMLLC experienced financing delays and instructed M3 to slow down engineering while certain pre-construction activities were completed on site. By August 2013, M3 had substantially curtailed engineering at a 65% complete status.
6.1 RECENT HISTORY OF OWNERSHIP OF THE PROJECT
General Moly, Inc. (GMI) is a Delaware corporation originally incorporated as General Mines Corporation on November 23, 1925. In 1966, the company amended its articles of incorporation to change its name to Idaho General Petroleum and Mines Corporation. The company amended its articles again in 1967 changing its name to Idaho General Mines, Inc. Then on October 5, 2007, the company reincorporated in the State of Delaware through merging Idaho General Mines, Inc. and General Moly, Inc., a Delaware corporation, which was a wholly owned subsidiary of Idaho General Mines, Inc. The reincorporation left General Moly, Inc. as the surviving entity. For reporting with the US Securities and Exchange Commission, General Moly, Inc. is the successor.
On October 4, 2007, the Board of Directors approved the development of the Mount Hope Project.
From October 2005 to January 2008, the company owned the rights to 100% of the Mount Hope Project. Effective January 1, 2008, GMI (with MHMI’s written consent) contributed its interest in the Mount Hope Project into a newly formed entity, Eureka Moly, LLC, (EMLLC) a Delaware limited liability company; and in February 2008, GMI entered into an agreement for the development and operation of the Mount Hope Project with POS-Minerals Corporation, an affiliate of POSCO, a large Republic of Korea steel company. Under the agreement, POS- Minerals owns a 20% interest in the EMLLC, while GMI, through its wholly-owned subsidiary Nevada Moly, LLC, (NMLLC) owns an 80% interest.
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Table 6-1: History of Mount Hope Project Area Year Description Before 1840 Western Shoshoni inhabited project region. 1840 – 1850 American settlers migrated toward California and Military expeditions traveled through the Mount Hope area. 1845 Pacific Railroad Survey crews moved through the area. 1870 – 1970 Sporadic small-scale underground mining occurred at or near the Project site (zinc- copper-silver). Early 1970s Phillips Petroleum Exploration explored for zinc and copper. 1971 Phillips encountered molybdenum mineralization. Mid 1970s ASARCO conducted exploration, recognizes significance of molybdenum mineralization. ASARCO did not reach agreement with Mount Hope Mines Inc. (MHMI) to test the potential. 1978 Exxon acquired an option on the Mount Hope property from MHMI. 1978 – 1983 Exxon conducted a pre-feasibility study, optimization study for molybdenum mining at Mount Hope. 1989 – 1990 Cyprus conducted a limited exploration under agreement with Exxon. 1995 Kennecott acquired an option on the property, conducted studies of the Exxon data and property, but allowed the option to expire. Property rights remained with MHMI. 2004 Idaho General Mines reached agreement with MHMI to lease MHMI claims (later assigned to EMLLC) and acquired Exxon, Cyprus and Kennecott data. 2004 – 2007 Idaho General Mines/General Moly conducted exploration, verified substantial molybdenum mineralization, and expanded mineral claims inventory, and undertook a pre-feasibility study and feasibility study of the Mount Hope Project. September M3 prepared “Mount Hope Project Bankable Feasibility Study”. 2007 April 2008 M3 issued the 2008 NI 43-101 report. 2008 – 2009 M3 worked on detailed design, advancing engineering to 60% complete. March 2009 EMLLC placed project into cash conservation mode. January 2012 M3 restarted engineering and procurement efforts. November EMLLC received a signed Record of Decision (ROD) from Bureau of Land 2012 Management (BLM) which allowed construction to begin. December 2012 Cultural clearance began at project site. January 2013 Construction effort on a fresh water line and clearing and grubbing began. March 2013 EMLLC had a delay in project financing. Construction at site began to slow down. July 2013 Construction at site stopped. August 2013 M3 substantially ramped down engineering and procurement to conserve cash. January 2014 M3 prepared this revised NI 43-101 report.
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7 GEOLOGICAL SETTING AND MINERALIZATION
7.1 REGIONAL GEOLOGY
Central Nevada is comprised of major sedimentary faces that characterize the Cordilleran Geosyncline during the early Paleozoic Era. Western assemblage rocks are comprised of eugeosynclinal and basinal deposits, including carbonaceous shale, mudstone, chert, and volcanic rocks. The eastern assemblage consists of thick rock sequences of shelf style carbonate and lesser clastic rocks.
During the mid-Paleozoic Antler orogeny, rocks of the western assemblage were thrust eastward over the shelf sequence. This area of thrusting is known as the Roberts Mountain Thrust Zone with Mount Hope located on the leading edge of this zone.
The Ordovician Vinini Formation is one of the host rocks for molybdenum mineralization in the Mount Hope vicinity and represents the Western Assemblage rocks in the Mount Hope area. Eastern Assemblage carbonate rocks outcrop east of Mount Hope in the Sulfur Spring Mountains and to the northwest in the Roberts Mountains. The accepted tectonic interpretations indicate that these carbonates also underlie the Mount Hope area beneath the Vinini formation. However, drilling up to depths of 3,000 ft has not confirmed the presence of carbonates beneath Mount Hope.
The Garden Valley Formation of Permian age represents the overlap sequence in the Mount Hope area. The Garden Valley Formation uncomfortably overlies the Vinini Formation in the Sulfur Springs Range, east of Mount Hope near Tyrone Gap. The zinc-lead-silver-copper- cadmium mineralization of the Mount Hope mineralization is hosted by the Garden Valley Formation, and an outcrop of the formation is found near the historic underground workings.
The Mount Hope deposit is located on a mineral belt linking deposits of diverse ages along a northwest-southeast trending line. The Battle Mountain-Eureka mineral belt coincides with northwest striking dikes and faults, which locally crosscut the north-south pattern of Basin and Range block faulting. This belt also has a prominent aeromagnetic signature along its northern extension. In aggregate, the system is 240 miles long. The system reflects a periodically renewed dislocation, which has served to localize intrusive and mineralizing activity during Cretaceous and Tertiary time. Activity along this zone has resulted in major deposits of gold, silver, copper, and molybdenum (see Figure 7-2).
Block faulting and associated basaltic volcanism began 16 million years ago and affected the entire area of the original Cordilleran Geosyncline within the Great Basin. Major Basin and Range faults border approximately N-S trending mountain ranges in the areas. These fault block mountains, including the block containing Mount Hope, are commonly tilted eastward at 10 – 20 degrees or more.
Figure 7-1 shows a geological cross-section of the region.
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Mount Hope
Figure 7-1: West-East Geologic Cross-Section Looking North
Figure 7-2: Northern Nevada Mines 7.2 PROJECT AREA GEOLOGY
Sedimentary rocks of the Vinini Formation, which surround the igneous rocks of Mount Hope, consist of carbonaceous shale, siltstone, silty limestone, quartzite and calcareous quartzite, and bedded chert. Within 980 ft of intrusive contacts, these rocks have been metamorphosed to biotite hornfels and calc-silicate hornfels. Brown colored biotite hornfels are exposed along the southern margin of the igneous rocks, where they are a molybdenum host. Irregular masses of hornfels also occur within the deposit.
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The Mount Hope deposit is located in a topographically elevated area with igneous rock exposure approximately 1 by 1.5 miles in size. The deposit contains both extrusive rocks and later intrusive rocks, which are rhyolitic in composition and display textural similarities indicating derivation from a common magmatic source.
Intrusive porphyry subsequently invaded the lower levels of the volcanic system, but solidified without venting to the surface. Quartz porphyry is presently exposed at the surface as a result of erosion. Other varieties of rhyolite porphyry, which intrude the quartz porphyry at the deeper levels, are known only from drilling.
An extensive sequence of Ash-flow tuffs is exposed at the summit of Mount Hope and on its eastern slopes, above the Mount Hope Fault. The Tuffs reach a maximum preserved thickness of 1,450 ft. The tuffs are characterized by pumice, broken phenocrysts, and lithic fragments. The volcanic sequence was extensively altered during subsequent mineralizing events. Ash-flow tuff is not a good molybdenum host because it lacks properties favorable for stockwork development.
Quartz porphyry constitutes a rhyolitic stock of irregular shape, which underlies much of the area. The porphyry is exposed south and east of the summit of Mount Hope and contains conspicuous phenocrysts of quartz and potassium feldspar. Quartz porphyry, the principal molybdenum host rock, is commonly veined with quartz in the deposit area, and a quartz vein stockwork is well developed in the subsurface.
The rock types, as logged by EMLLC and their contractors, Mine Mappers, Inc., were interpreted on cross sections. Those sections were converted to wire frame models of the major rock units at Mount Hope. These wire frame geometries were used to assign rock type and alteration codes to the block model. IMC spot checked the Mine Mappers’ interpretation of the geologic structure and found it acceptable.
Figure 7-3 shows a geological east-west cross-section looking north of the Mount Hope deposit.
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Figure 7-3: West-East Cross-Section Looking North 7.3 MINERALIZATION
The main form of molybdenum mineralization is molybdenite (MoS2), developed within the porphyritic igneous rocks and in the Vinini hornfels adjacent to the southern margin of the igneous rocks. Much of the known molybdenite is distributed around two mineralized systems consisting of two dome shaped zones of mineralized stockworks. These zones are shaped like inverted bowls along an east-west trend. The two systems form east and west mineral systems that intersect each other.
7.3.1 Eastern and Western Minerals Systems
The western mineral system is characterized by a triangular distribution of molybdenum grades in plan view with well-defined grade zones. Mineralization is best developed in the southern and eastern quadrants of this system. The center of the system is directly above the western quartz porphyry intrusive stock.
The eastern mineral system contains well-developed mineral grade shells in quartz porphyry above the eastern porphyry stock. In the northwest quadrant of the system, these shells are continuous with mineralization of the overlap zone. The apex of the mineral system has, however, been sliced off and faulted down and eastward along the Mount Hope Fault. The offset fault mineralization is theorized to lie above the fault.
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7.3.2 Overlap Zone
A concentration of higher-grade mineralization is present between the eastern and western mineral systems. Referred to as the overlap zone, this zone is roughly 1,300 ft in diameter and varies from 325 to 985 ft thick. The top is 325 ft below the ground surface. This zone is the nucleus of the open pit target. Overlap mineralization lies beneath the Mount Hope Fault, and the upper, eastern edge is truncated by the fault surface. The overlap zone is interpreted as a rock volume that was mineralized by both mineral systems in sequence, contributing to a greater intensity of stockwork veining and additive molybdenum grades. See Figure 7-4.
Figure 7-4: High-Grade Quartz-Molybdenite Veins in Mount Hope Ore
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8 DEPOSIT TYPES
The Mount Hope Deposit is a classic molybdenum porphyry, typified by the deposit at Climax Colorado. This type of deposit has well zoned molybdenum (moly) mineralization where the grade zoning surrounds the central zone of the deposit and forms geometries that are circular in plan and arch shaped in section.
Mount Hope differs from Climax in that the multiple mineral centers are adjacent horizontally rather than juxtaposed over the same porphyry center. The centers of mineralization are referred to as the east and west mineral systems. The eastern and western mineral systems each contain mineral shells at least 3,300 ft in diameter, and the two systems are centered about 2,300 ft apart along a west-northwest axis. The mineral zones or “shells” consist of quartz stockwork veining that contains molybdenite that is hosted within both porphyry and sedimentary units.
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9 EXPLORATION
The majority of exploration activities for the Mount Hope Project were completed before EMLLC leased the property. References to tonnage and grade in this section reflect historic documentation that does not meet the requirements for mineral resources or mineral reserves as defined by NI 43-101.
Zinc-lead ores were discovered at Mount Hope in 1870, and small-scale mining occurred sporadically until the 1970s. Drilling by the United States Bureau of Mines (USBM) during World War II defined approximately 176,000 tons grading 9.9% zinc. Zinc and adjacent copper mineralization were the focus of drilling activities by Phillips Petroleum in the early 1970s and by ASARCO and Gulf in the mid-1970s. Drilling by Phillips outlined approximately 290,000 tons of ore grading 6% zinc, and the last drill hole drilled on the property in 1971 encountered significant molybdenum mineralization at depth west of the zinc deposits. The significance of this mineralization was first recognized by ASARCO in 1976, but ASARCO was apparently unable to reach agreement with Mount Hope Mines, Incorporated (MHMI) to test this potential.
Exxon Minerals Company (Exxon) recognized the molybdenum potential at Mount Hope in 1978 and acquired an option on the property from MHMI. By 1982, Exxon had completed 69 holes, which partially defined a major molybdenum deposit underlying the east flank of Mount Hope. Exxon completed a pre-feasibility study on the deposit in 1983, which included block modeling, mine planning, metallurgical testing, engineering, and capital and operating cost estimation. A mine plan was developed consisting of 672 million tons grading 0.085% molybdenum with a waste to ore ratio of 3.0 to 1.0. The Exxon operating plan was based on an annual mine production rate of 10.9 million tons of ore over a 58-year period. A draft Environmental Impact Statement (EIS) was completed on the project, and public hearings were held in early 1985. Exxon drilled an additional 60 holes on the property between 1983 and 1988.
Cyprus drilled four holes on the property in 1989-90 under an agreement with Exxon. Kennecott Exploration executed an agreement in 1995, allowing Kennecott to study the prospect and execute a purchase by April 30, 1996. Kennecott reviewed the property and data, but did not drill any new holes on the property.
IGMI/GMI/EMLLC has drilled 90 holes at the Mount Hope Project, starting in 2005, for a total of 87,905 ft. Of this amount, 31,906 ft has been core, and the remainder reverse circulation (RC) drilling divided amongst water exploration and development, exploration, condemnation, ore body infill and verification.
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10 DRILLING
The majority of the drilling at Mount Hope was completed by Exxon Minerals during the 1980s. Earlier holes were drilled by both Phillips and Cyprus prior to Exxon’s control of the property. GMI and their predecessor company, IGMI, drilled an additional 100 drill holes during 2004 through 2009. IGMI and GMI drill programs will be combined for discussion within the sections of drilling and sampling and referenced as GMI. There has been no new drilling added to the Mount Hope deposit since 2009.
EMLLC personnel found the assay certificates, as well as the assay and geology logs for the historic drill data, and entered it into spreadsheets. That data was converted back into English units and combined with the GMI data as the master database for development of the block model. The table below summarizes the drill hole count by company and drill type.
The majority of the drill data available to EMLLC for development of the block model are in the form of diamond drill core. The drill core was stored in the core shed at Mount Hope by the previous leaseholders. The physical core was available to EMLLC for data checks, geologic logging verification, and metallurgical testing.
Table 10-1 summarizes the drilling history at Mount Hope. The 100 holes drilled by IGMI and GMI were completed from 2006 through 2009. SRK drilled 10 of these holes in 2006 for the purpose of gathering information for Acid Rock Drainage (ARD) classification of the waste rock. The remaining 90 holes by IGMI and GMI were drilled between 2007 and 2009.
There were 20 core holes completed by IGMI-GMI that were distributed across the ore body to confirm the previous drilling, and to add in-fill information to improve the confidence of the estimate. The additional assays were incorporated to measure molybdenum oxide by acid soluble methods. This was completed in order to improve the understanding of the oxide-sulfide surface and confirm the elevation of the top of sulfides in order to provide a good estimate of waste mining required to release the sulfide mill ore.
The RC holes that were drilled by GMI during 2007 and 2008 were predominately for condemnation or determination of site ground water conditions. The majority of the RC holes (70%) is located outside of the block model area and has no impact on the estimation of resources.
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Table 10-1: Drill Hole Data Summary Data Available for the Assembly of the Block Model Reverse RC Collar - DDH Company DDH Core Circulation Finish Holes Feet Holes Feet Holes Feet
Asarco 2 1,138 Cyprus 2 1,600 2 2,260 Exxon 38 71,940 28 24,058 65 110,920 Phelps Dodge 13 4,008 Phillips 11 10,581 1 358 5 4,850 SRK for IGMI 10 5,016 IGMI 17 24,648 8 5,985 10 6,412 GMI 3 7,258 52 43,602
Totals 92 123,451 93 76,741 82 124,442
Total Drilling 267 324,634
After the completion of the Data Verification as summarized in Section 12, IMC and John Marek (QP) finds that the drilling, sampling, and sample recovery are appropriate for the calculation of mineral resources and mineral reserves for this type of deposit. The QP has not identified factors regarding drilling, sampling, or sample recovery that would materially impact the accuracy and reliability of the results.
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11 SAMPLE PREPARATION, ANALYSES AND SECURITY
11.1 SAMPLING METHOD AND APPROACH
The majority of drilling data used for the assembly of the block model was the available diamond core assays. Split core remains in storage confirming the sample preparation procedures recorded by Exxon.
Exxon split the diamond drilled cores on site, and sent the splits to outside laboratories for sample preparation and assay.
RC drilling completed by GMI has been used for data collection for water conditions within and around the pit area. This information was assayed and when located within the model area, it has been used for estimation of the block model.
11.2 SAMPLE PREPARATION, ANALYSES, AND SECURITY
Roughly half of the drilling and assay data available at Mount Hope was completed under the control of Exxon. The Exxon reports describe the sample preparation and assay procedures that were utilized. The checks and verification by IMC and EMLLC of the Exxon data are summarized below.
The historic Exxon information indicates that the sample preparation procedures were as follows:
Split drill core with conventional core splitter. Crush split core on site to ½-inch. Ship the entire ½-inch crushed samples to Rocky Mountain Geochemical. RMGC crushes entire sample to 1/8-inch. Split 1/8 of the crushed sample with a Jones splitter for pulping. Grind to 100 mesh with a Braun pulverizer. Split out 150 to 175 grams and grind to 200 to 300 mesh with ring pulverizer. Digest in perchloric acid and analyze with AA.
Preparation of drill samples during the first two years (1978 and 1979) started with crushing to ½-inch of which one-quarter of one sample was sent for preparation. Assay results for these two years were unstable, which was caused by the coarse split at ½-inch. All intervals during this period were resampled and re-assayed by the methods listed above with a 1/8 inch crush before splitting. IMC found records of this process and the re-assays in the paper files. The re-assays were used in the database.
The primary assay lab used by Exxon was Rocky Mountain Geochemical. IMC is not aware of the certifications standards adhered to by Rocky Mountain Geochemical during the early 1980s.
Exxon also instituted the use of external check assays along with standards. External checks were selected as a second one-eighth split of the 1/8-inch crush material roughly every ten intervals. These were checked at the CMS laboratory in Salt Lake City. IMC found record of
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these check assays within the drill logs and, where observed, found them to be close checks of the original Rocky Mountain Geochemical assays.
Data collection procedures for GMI core samples were as:
Core is split on site with a conventional splitter. The half core is shipped to ALS-Chemex in Elko. Crush the entire half core to 10 mesh. Split 250 grams for pulverizing. Pulverize to 70% passing 75 micron (200 mesh). Digest with four acids. Analyze 0.4 gm aliquot with AA (Chemex Mo-0G62 method) or ICP (Chemex ME- ICP61). Analyze selected intervals for oxide moly by an acid soluble method (Chemex Mo- ICP05A).
RC Samples are collected and bagged in 5-ft intervals. Cuttings are sent to ALS-Cemex for splitting and preparation as described above for core.
The Mount Hope deposit is unique for the U.S. in that the database, model, and project engineering were converted to the metric system by Exxon during their tenure on the property. During the course of this work, EMLLC converted the drill hole database and surface survey back to an English unit grid. That grid is a metric-to-feet conversion of the UTM NAD 83 coordinate system.
During 2008, GMI resurveyed the collar coordinates of all drill hole collars that could be identified on the project site.
The Qualified Person, John Marek, finds that the sample preparation, analysis, and security are appropriate for the calculation of mineral resources and mineral reserves for this type of deposit.
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12 DATA VERIFICATION
A series of verification procedures were applied to IGMI-GMI drilling and the historic database. The data were checked by drill type as well as drill program. The following data verifications were completed by IMC and John Marek:
GMI drill hole data were completed under the control of GMI personnel and were verified by duplicates, standards and blanks submitted with the samples in a standard QAQC program. IMC completed a statistical analysis of the duplicates, standards, and blanks. Historic drilling was originally checked by IMC with a 49-sample independent assay program. IMC reviewed the QAQC procedures as documented by Exxon. Historic drilling data were paired with GMI drilling by nearest neighbor methods to confirm similar results for both the new and the old drill programs. RC drilling was compared against nearest neighbor diamond core results.
As a result of the work summarized in this section, the Qualified Person, John Marek, holds the opinion that the data verification procedures and their statistical results are reasonable and the resulting data base can be used for the determination of mineral resources and mineral reserves.
12.1 GMI QAQC
GMI submitted blanks and standards for assay to the ALS-Chemex lab. Those results were used to confirm the accuracy of the assay program. Duplicate samples are resubmitted to the Chemex lab as a check on the repeatability or precision of the original assay.
IMC obtained copies of the QAQC data from GMI and completed an independent statistical analysis of the reported results.
Duplicate results for molybdenum are summarized on Figure 12-1. The duplicates confirm the original samples as indicated on the figure.
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0.400
0.350
0.300
0.250
0.200
0.150 Duplicate Assay Mo% Assay Duplicate
0.100
0.050
0.000 0.000 0.050 0.100 0.150 0.200 0.250 0.300 0.350 0.400 Original Assay Mo%
45 Degree Line Shown
Mean of Original Assays = 0.032 % Mo Mean of Original + 0.001% 0.058 % Mo Mean of Duplicate Assays = 0.030 % Mo Mean of Duplicate +0.001% 0.056 % Mo Number of Pairs 357 Number of Pairs 196
T Statistic on Means = 0.678 Pass at 95% Paired T Statistic = 0.031 Pass at 95% Figure 12-1: Duplicate Assays, GMI Drilling Program
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Reported Standards vs Accepted Standard Values
1300
1200
1100
1000
900
800
700
600
500 Reported MoReported PPM 400
300
200
100
0 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 Standard Value PPM
41 Samples out of 408 are likely swapped assignments (10%) Standards Values Average of Reported Standards 112.3 ppm 158 ppm 330.6 ppm 338 ppm 375.6 ppm 371 ppm 476.2 ppm 476 ppm 812.5 ppm 811 ppm 1089.3 ppm 1069 ppm Figure 12-2: Results of Submitted Total Moly Standards
The results of GMI submitted standards for molybdenum are summarized on Figure 12-2. Figure 12-2 indicates that roughly 10% of the reported standards values are likely swapped results of other standards. This level of sample swapping is not acceptable, and likely indicates sloppy recording practices regarding the recording of the standard number when they were submitted.
The standards where the reported mean does not match the accepted mean are those where a larger percentage of swapping has occurred. If the standards swaps are ignored, there does not appear to be sample bias issues with the data.
Blank results for GMI drilling were reviewed by IMC. There are four submitted blanks out of 233 with values greater or equal to 0.002% Mo (1.7%). The maximum value of all submitted blanks is 0.002% Mo. These few non-trace values and their low result indicate that the inserted blanks are properly reported during the GMI program.
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12.2 CHECK ASSAYS OF EXXON DATA
During 2005, GMI and IMC embarked on a check assay program to verify the historical sample and assay procedures that were applied prior to EMLLC involvement.
An GMI and IMC team spent two and one half days in the Exxon constructed core shed on site and collected 49 drill intervals of half core for check assay. These 49 samples were collected from 10 drill holes that spanned the entire history of Exxon drilling and included one hole drilled by Phillips and one sample from one hole drilled by Cyprus.
During this process, IMC personnel checked the logged rock types and alterations against direct observation of the core and found the logs to be consistent and reliable. Subsequent logging by GMI geologists have occasionally disagreed with some of the alteration classifications assigned by the Exxon geologists. However, the logged alteration does not have an impact on the estimated mineral resources or mineral reserves. John Marek (QP) finds these types of inconsistencies to be typical of judgment calls required during core logging.
The entire half core was sent to ALS-Chemex in Elko, Nevada for preparation followed by three acid digestions with AA finish check assays. IMC assisted in and observed all of the sample collection, bagging, and labeling for shipment of the check samples prior to shipment. Samples were loaded onto the transport vehicle by IMC and EMLLC personnel and driven by an EMLLC contractor to the ALS-Chemex lab in Elko. The sample inventory sheet from ALS-Chemex matched the sample delivery list prepared by IMC precisely, indicating proper chain of custody of the samples.
IMC and EMLLC specified the sample preparation and assay procedures to be used for the check. A standard ALS-Chemex preparation procedure was selected as follows:
12.3 CHECK ASSAY SAMPLE PREP AND ASSAY PROCEDURES
Crush the entire half core to 10 mesh. Split 250 grams for pulverizing. Pulverize to 70% passing 75 micron (200 mesh). Digest with three acid Aqua Regia. Analyze 0.4 gm aliquot with AA (Mo-AA46 method total molybdenum).
Additional assay procedures were completed by ALS-Chemex at the request of EMLLC. That information was utilized by both process and environmental contractors. IMC focused on the procedures listed above in order to verify the sample preparation and assay procedures. The check assay results were emailed by ALS-Chemex directly to IMC and EMLLC simultaneously. IMC compared the database information with the check assay results.
The results of a series of statistical hypothesis tests of the original vs. check assays at the 95% confidence level are:
Smith-Satterthwaite T Test (test of means): Pass
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Paired T Test (test of sample to sample difference): Pass Binomial Test (comparison of high vs. low checks): Pass Komologorov-Smirnoff Test (test of distribution): Pass
In summary, the mean of the original 49 samples was 0.099% Mo, and the mean of the check assays was 0.101% Mo. The check assays provide a sound confirmation of the historic sample and assay procedures that were applied at Mount Hope. Combined with the data base checks and collar coordinate survey checks, IMC has formed the opinion that the data set can be used to define reserves once all the other conditions for that definition are met.
12.4 EXXON QA/QC PROCEDURES
EMLLC and IMC personnel studied the historical records within the Exxon archives regarding data quality control and assurance. Exxon used check assay procedures and standards insertion procedures to assure quality control of the data.
As discussed earlier, a change to sample preparation was made in 1980. Prior to that time, samples were crushed to ½-inch and split for transport to the lab. Check assay repeatability work by Exxon in 1980 indicated that the split was too coarse of size. A procedure change was implemented whereby by the ½-inch crush was continued at the project site, but the entire crushed half core was sent to Rocky Mountain Geochemical in Salt Lake City for additional crushing to 1/8-inch prior to splitting. IMC reviews of the 1978 and 1979 assay data and these data indicate that the samples were re-crushed, pulped, and re-assayed. The use of the re-assays has been spot checked within the electronic database.
Sample preparation procedures at Mount Hope utilized fine pulverizing to 200 to 300 mesh. Exxon completed several tests on sample repeatability where pulp sizes of 100, 300, and 400 mesh were compared. Repeatability was better with the finer 300 mesh samples. Sample to sample variance was the primary measure within these repeat tests on sample grind. Sample repeat errors of 5% were considered problematic by Exxon and the finer pulp size was established to reduce the variance measured by the check samples. It should be noted that the grind size issues were related primarily to reduction of variance. IMC reviews of two historic check sets indicate that the finer grind did produce slightly higher average grades indicating that there is some degree of molybdenum encapsulation at the 100-mesh grind size. Consequently, the fine pulp size of nominal 300 mesh was established as the standard procedure.
Exxon also compared assay digestion procedures and analysis methods. Atomic absorption, titration, and colorimetric methods were compared. There was general agreement between methods, and AA was used as the primary case.
Pulverizing by ceramic plate pulverizers was compared against steel plate pulverizers to confirm that no molybdenum was obtained from the pulverizer. Steel plate pulverizers were found acceptable.
IMC reviews of the numeric results in Exxon reports found the check assay comparisons to be reasonable once the final sample preparation method was established.
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12.5 NEAREST NEIGHBOR GMI VERSUS HISTORIC DRILLING.
IMC completed comparisons of total molybdenum and oxide molybdenum results between the several drill programs completed over time. The major comparison was completed between the GMI controlled drilling and the historic Exxon program.
The comparison of new versus historic drilling was based on 50-ft down-hole composites that were calculated by IMC. Composites from each drill program that were closely spaced were sorted and compared on a statistical basis.
A comparison of total molybdenum between GMI core drilling and the Exxon core drilling resulted in 23 pairs of total molybdenum composites that were less than 100 ft apart from one another.
Table 12-1: Total Molybdenum Comparison IGMI (GMI) vs. Exxon Drilling Number of GMI-IGMI Separation Pairs Mean Exxon Mean 100 ft 23 0.026% 0.023% 150 ft 179 0.056% 0.061%
The above data sets pass a series of three hypothesis tests that indicate that both data sets could come from the same distribution with 95% confidence.
A comparison of molybdenum oxide assay results did not require pairing of samples because there were a number of intervals that had originally been assayed by Exxon and also assayed by GMI for molybdenum oxide. The GMI molybdenum oxide data includes assays by GMI as well as samples collected by SRK on behalf of GMI.
A direct comparison of SRK molybdenum oxide assays versus original Exxon oxide assay resulted in the graphs on Figure 12-3 and Figure 12-4.
The graph indicates that the high-grade Exxon molybdenum oxide values above 1,300 ppm (0.130%) are not confirmed by recent re-assays. The QQ plot indicates that below 1,300 ppm, the Exxon values average 10% higher than the SRK-GMI results.
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Figure 12-3: SRK-GMI Moly Oxide vs. Exxon Moly Oxide Assays QQ Plot
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Figure 12-4: SRK-GMI Moly Oxide vs. Exxon Moly Oxide Assays – XY Scatter Plot
12.6 CORRECTIONS TO EXXON MOLYBDENUM OXIDE ASSAYS
The Exxon molybdenum oxide assays were corrected within the database with the following procedure:
Exxon Molybdenum Oxide > 1300 ppm were removed from the data base Exxon Molybdenum Oxide <= 1300 ppm were factored by 0.90
The factored Exxon molybdenum oxide data was merged with the more recent molybdenum oxide data. The hierarchy of utilization was as follows:
GMI-IGM Molybdenum Assays Utilized First If the above were not present, the SRK Molybdenum Oxide Values If still not valued, utilize the Exxon Factored Molybdenum Oxide Values.
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12.7 DIAMOND DRILLING VERSUS RC DRILLING
A comparison was completed between diamond drill composites and RC composites on a nearest neighbor basis. In summary, the RC data generally assay lower values than for the Diamond drill neighbors.
Table 12-2: Total Molybdenum Comparison DDH vs. RC Drilling Number of Separation Pairs DDH Mean RC Mean 50 ft 74 0.040% 0.033% 100 ft 77 0.039% 0.032%
The two data sets pass the T-Test for similar means, but the sample-to-sample variation of the Paired T-Test does not pass with 95% confidence.
Despite the low bias of the RC data, it was included in the database as it does provide area coverage for block grade estimation that would be missing if the RC data were rejected. Inclusion of the RC data results in a conservative estimate of the total molybdenum grade.
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13 MINERAL PROCESSING AND METALLURGICAL TESTING
Early metallurgical testing of samples from the Mount Hope deposit was conducted by Exxon Minerals Processing Research Section (Exxon) between 1981 and 1983. This was followed by more recent work conducted at Allis-Chalmers, Hazen Research, Inc., A.R. MacPherson Consultants, Mountain States Research & Development, Inc. (MSRDI), SGS Lakefield Research Limited (SGS) and SGS Vancouver Research Limited (SGS-Vancouver).
The Exxon work was considered to be comprehensive and sufficiently developed. The focus was to examine crushing and grinding indices, reagent schemes, grind-recovery relationships, flotation times, concentrate grades, gravity sedimentation, pulp rheology, and filtration. However, given that the tests were performed over 25 years ago, EMLLC undertook a program to confirm the results, and take advantage of recent developments in evaluating grindabilities for mill sizing and circuit balance. Locked-cycle flotation tests were also performed to better understand circulating loads, final concentrate grades, and recoveries.
The 2007 technical report was largely based on tests results from Exxon and MSRDI, with grinding work from SGS. Since then, a significant amount of work was completed by SGS around the time when basic engineering started from 2006 through 2008. SGS tested composites to develop the overall process flowsheet. They also tested individual (uncomposited) samples that came from different points in the mining cone to estimate the variability of the processing response during the mine life.
MSRDI conducted a few tests to determine the leachability of impurity elements in the molybdenite concentrate by hot ferric chloride leach. They also roasted molybdenite concentrates and successfully produced molybdenum trioxide.
13.1 COMMINUTION
13.1.1 Comminution Testing and Modeling
In 2013, EMLLC submitted 114 drill core composite samples to SGS for testing to determine hardness measures for grinding simulation using CEET2® technology. CEET® (an acronym for the Comminution Economic Evaluation Tool) is a grinding design and performance predicting tool that uses the Ci crushing index, SPI® SAG power relationship and Bond’s third theory of comminution to model the energy performance of the SAG and ball mill circuits. The grinding circuit will be a conventional circuit comprising a SAG mill, two ball mills and one or more pebble crushers (SABC).
The dataset of 114 samples was geostatistically distributed across the resource to represent the Mount Hope orebody. The three-dimensional views of the drill holes in the IMC block model of Mount Hope (2005 version), the plan view of the drill collars and the year each interval was to be mined were used to select the appropriate samples. Overall, the decisions on which intervals to test were a collaborative effort between EMLLC, SGS and IMC. The location and distribution of the samples will be discussed further into this section because of geological refinements that affect the mill throughput.
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13.1.2 Comminution Test Results and Circuit Design
The crusher index (Ci) SAG Power Index (SPI) and Bond ball mill work index (BWi) values developed for Mount Hope provide a good indication of ore harness variability within the orebody. The results are summarized in Table 13-1. The samples are characterized as soft to medium in hardness with an average SPI of 44.3 minutes and an average BWi of 11.8 kWh/metric ton. The average Bond work index is lower than the SGS database average of 15 kWh/metric ton. The variability of the ore hardness is typical of large porphyry deposits.
Table 13-1: Summary of Grindability Test Results Parameter Crusher SPI, minutes BWi, Index, Ci kWh/mt Average 30.8 44.3 11.8 Standard Deviation 15.0 22.2 2.5 Rel Std. Deviation 48.6 50.1 21.1 Minimum 73.0 10.0 7.5 Maximum 6.3 119.3 17.5
The average specific energy consumption was found to vary from an average of 8.2 kWh/st in the softest year to an average of 11.8 kWh/st in the hardest ore years. Over the life of mine, the average SAG mill circulating load to the pebble crusher is estimated to be 13.5% with a maximum annual average of 21% in the hard-ore years. Maximum circulating load from any block is expected to be 650 short tons per hour. The ball mill calculations are all based on an assumed circulating load of 300%.
13.1.3 Design of Grinding Circuit
Based on the above grindability data, SGS designed a SABC circuit for 55,116 short tons per day, or 2,497 short tons per hour at 92% operating time and a product P80 of 150 microns. The recommended mill sizes are:
One SAG mill, 34’ diameter by 18’ EGL, with two 6 MW motors Two ball mills, 22’ diameter by 37’ EGL, each with two 4.75 MW motors One 600-kW cone crusher
The design considered a 5% factor for power losses incurred through the drive trains. SAG mill grates were selected at 2.75” (70 mm). Final SAG product would be separated at 0.3 inch (8 mm) over a combined trommel and vibrating screen. A variable-speed drive was selected on the SAG mill to provide flexibility to reduce mill speed under extremely soft-ore conditions. The variable- speed drives also allow for higher SAG ball loadings to maximize throughput for the hardest ores while minimizing the risk of damage to the mill liners.
The CEET modeling result indicate an 8% statistical risk of not delivering the target throughput and product. The model predicts that the throughput design rate will not be met with the hardest ores planned for processing in Years 13 through 15.
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13.1.4 Update of Grinding Circuit Design
The actual SAG mill and pebble crusher purchased by EMLLC are larger than the mills recommended by SGS:
One SAG mill, 36’ diameter by 17’ EGL (19’ F/F), with a 13.5 MW gearless drive Two ball mills, 22’ diameter by 36.5’ EGL (37’ F/F), dual drive, total 9.7 MW One 672-kW short-head cone crusher (to be added in Year 8)
In addition to the larger mills, the original hardness model in the May 2008 NI 43-101 has been refined by reinterpreting the hardness distribution against the geology of the deposit.
The original hardness model used kriging to spread hardness volumes in the block model and calculated mill throughput from the hardness values for ore blocks processed for each year. A reexamination of the samples indicted that the hardness indices and lithology did not correlate well.
Three dimensional modeling of rock types and alteration types shows that hardness indices better correlate to alteration types (Figure 13-1 through Figure 13-4). More importantly, the harder ores were located in a shell surrounding the silicic alteration in the core of the deposit and largely found in potassic alteration located near the interface of potassic and silicic alteration (Figure 13-3 and Figure 13-4). From this, IMC developed a model identifying the location of the harder indices and the location of the four primary alteration and rock types.
Figure 13-1:Three-dimensional distribution of 114 samples in deposit, hard ore shown in yellow with softer ores shown in light blue
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Figure 13-2: Grindability samples and silicic alteration shown in light pink.
Figure 13-3: Grindability samples and hard alteration shown in light green.
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Figure 13-4: Grindability samples & potassic alteration (light red) that surround the silicic core. IMC’s model shows the hard rock as partial shell covering a portion of the silicic alteration with a total thickness of about 500 feet. The shell extends 150 feet into the silicic alteration and 350 feet into the potassic alteration. The model blocks within the shell were then coded with the average of the hardest indices for estimation of mill throughput. Other areas of the block model were then coded for hardness relative to alteration type.
IMC regrouped the original 114 samples into four alteration groups:
Throughput 1 – Hard Zone, Throughput 2 – Silicic, Throughput 3 – Potassic, and Throughput 4 – Rhyolite.
IMC then reassigned the grindability indices (Ci, SPi, BWi) for each alteration and EMLLC sent them to SGS for modeling. Using the new alteration assignments, SGS conducted simulations with and without recycle crushing, at grind product sizes of 80 percent finer than 150 μm and 200 μm SGS, with their CEET modeling software. The simulations allowed SGS to predict the throughput of the actual SAG mill and ball mills bought for the project, for each of the four alterations.
The grinding circuit remains a conventional SABC type circuit, but with the larger SAG mill. EMLLC will add a SAG pebble crusher in year 8 corresponding to the period when the mine encounters harder ores. Utilizing the SGS CEET2 modeling results at 92% mill operating time, yields higher throughput estimates, as shown Table 13-2 and Figure 13-5.
The nominal capacity of the Mount Hope process plant is now increased by 10 percent, from 60,625 short tons per day to 66,688 short tons per day. EMLLC has directed M3 to use this new tonnage as the design tonnage for the entire plant.
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Table 13-2: Theoretical Modeled Throughput by Operational Year Operating Year Month/ Year Avg tons/d Screen Pebble Crush P80, µm Jan-17 66,688 11mm No 150.5 Feb-17 66,688 11mm No 151.9 Mar-17 68,925 11mm No 150.0 Apr-17 70,312 11mm No 150.0 May-17 70,704 11mm No 150.0 Jun-17 70,403 11mm No 150.0 Y1 Jul-17 70,192 11mm No 150.0 Aug-17 70,306 11mm No 150.0 Sep-17 70,704 11mm No 150.0 Oct-17 70,939 11mm No 150.0 Nov-17 71,274 11mm No 150.0 Dec-17 71,210 11mm No 150.0 Y2 2018 66,688 11mm No 153.3 Y3 2019 66,688 11mm No 167.6 Y4 2020 66,688 11mm No 155.8 Y5 2021 66,688 11mm No 152.2 Y6 2022 66,688 11mm No 155.8 Y7 2023 67,116 11mm No 150.0 Y8 2024 66,688 11mm Yes 164.9 Y9 2025 66,688 11mm Yes 166.4 Y10 2026 66,688 11mm Yes 153.6 Y11 2027 67,314 11mm Yes 150.0 Y12 2028 70,305 11mm Yes 150.0 Y13 2029 71,774 11mm Yes 150.0 Y14 2030 71,443 11mm Yes 150.0 Y15 2031 68,015 11mm Yes 150.0 Y16 2032 71,223 11mm Yes 150.0 Y17 2033 69,367 11mm Yes 150.0 Y18 2034 71,095 11mm Yes 150.0 Y19 2035 71,406 11mm Yes 150.0 Y20 2036 68,296 11mm Yes 150.0 Y21 2037 72,359 11mm Yes 150.0 Y22 2038 66,688 11mm Yes 155.3 Y23 2039 67,706 11mm Yes 150.0 Y24 2040 67,197 11mm Yes 150.0 Y25 2041 66,688 11mm Yes 162.6 Y26 2042 69,694 11mm Yes 150.0 Y27 2043 70,952 11mm Yes 150.0 Y28 2044 71,567 11mm Yes 150.0 Y29 2045 72,023 11mm Yes 150.0 Y30 2046 72,444 11mm Yes 150.0 Y31 2047 72,988 11mm Yes 150.0 Y32 2048 73,201 11mm Yes 150.0 Y33 2049 73,201 11mm Yes 150.0 Y34 2050 73,201 11mm Yes 150.0 Average 69,430 152.6
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Figure 13-5: Modeled Throughput and P80 by Year
13.2 FLOTATION TESTS
Exxon conducted the first set of flotation tests on composite samples. This was followed by work done at MSRDI, and SGS/SGS-Vancouver. The tests focused on the effect of grind and regrind, determining overall recoveries (recovery models) and developing a robust flotation flowsheet for the deposit.
SGS metallurgical testing was incomplete at the time of publication of the May 2008 report. SGS recovery and grade results were very similar to those found by Exxon and resulted in total sulfide recoveries 3% higher than those developed by MSRDI on a smaller sample set. Because of the breadth of samples tested, and the testing of uncomposited samples, the Exxon and SGS test results are more representative of the overall deposit, and how this deposit will respond to processing over the course of the mine life.
13.2.1 Flotation Test Samples
The Exxon work consisted of 310 tests on 9,400 pounds of sample. The Exxon test work comprised of variability testing on three distinct ore types: quartz porphyry, ordovician vinini, and blue quartz (hornfelds), representing 95% of the ore mineralization of the proposed pit. Composites of each of the three rock types and a master composite of the overall pit ore were prepared.
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MSRDI conducted bench scale tests on 20 composites, one of which represented approximately 70% of the silicic porphyry of the deposit.
SGS tested a total of 83 core samples ranging from high-grade ore to very low-grade ore and 32 samples containing high concentrations of molybdenum oxide. The samples collected are concentrated in the first 10 years of mining and represent a reasonable breadth and depth of the deposit. Figure 13-6 through Figure 13-8 map the location of the samples collected for the SGS flotation testing.
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Figure 13-6: Drill Core Locations Showing Relative Grades (Plan View)
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Figure 13-7: Drill Core Locations Showing Relative Grades (East-West Section)
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Figure 13-8: Drill Core Locations Showing Relative Grades (North-South Section) (83 samples SGS used for flotation testing (+ indicates sample site and ++ indicates samples taken at multiple depths)
13.2.2 Flotation Test Results from Exxon
Exxon determined the range of primary grinds for economic recovery, by developing the relationship between ball mill product and rougher recovery. Exxon test results averaged 88.9% recovery and concentrates grades exceeded 51.7% Mo. Exxon also conducted microscopy analysis on the rougher and cleaner tailing. Significant losses were seen from liberated molybdenite particles that are finer than 10 μm: approximately 35% of the losses in the roughers tails, and from 63 to 76 percent of the losses in cleaner tails. Exxon estimated that additional recovery of 1 to 3 percentage points could be achieved if these fine-particle losses could be eliminated.
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13.2.3 MSRDI Flotation Test Results
MSRDI created composites from 20 samples to do their test work. TQP composite represents the primary source of mill feed (more than 70%). Two tests used the Exxon flowsheet scheme and the rest used a modification of the Exxon scheme. The sampling expanded the range of molybdenite ores to include mid and low grades. The tests also successfully used water from the site (KV-11, Risi, & Kobeh). The final metallurgical design mass balance and engineering design criteria proposed by MSRDI were based upon TQP composite tests. Table 13-3 presents the results of flotation tests performed by MSRDI.
Table 13-3: MSRDI Flotation Test Results Head Assay Flow Flotation Final Molybdenum Test Ore % Mo Sheet Water Concentrate Recovery No. Sample Assayed Calculated Scheme Source Assay, % Mo % 7 MC #1 0.105 0.105 Exxon Vail 54.5 84.1 8 MC #1 0.105 0.099 Exxon KV-11 50.9 82.1 9 MC #1 0.105 0.095 MSRDI Vail 50.9 87.6 10 Low Grade 0.048 0.040 MSRDI Vail 52.5 82.7 11 MC #1 0.105 0.097 MSRDI Risi 53.8 87.7 12 Mid-Grade 0.060 0.060 MSRDI Vail 55.5 74.7 13 TQP 0.115 0.112 MSRDI Risi 54.7 85.7 14 MC #2 0.100 0.099 MSRDI Kobeh 55.4 86.9
The results show an average recovery on the four main rock types of 85.7-87.7% and final concentrate grades between 50.9-55.4% Mo. MSRDI developed a recovery relationship to head grade, with the higher grade ores having higher molybdenum sulfide recovery. This recovery model was used in the 2008 NI 43-101 report.
During the tests, MSRDI identified molybdenum oxides in the ore and found them to be unrecoverable by conventional flotation techniques.
13.2.4 SGS Flotation Test Results
13.2.4.1 Effect of Molybdenite Oxidation
Several samples were sent to SGS-Vancouver to test the flotability of oxide molybdenum. These samples spans were chosen from available core to span a wide range of degrees of oxidation. The results of the flotation tests are shown in Figure 13-9. The results clearly show that oxidized molybdenum is not recoverable by conventional flotation methods. This supports the findings of MSRDI and the earlier decision by EMLLC to exclude oxidized molybdenum from the ore reserves.
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Figure 13-9: Effect of oxidation on the flotation recovery of molybdenum
13.2.4.2 SGS Recovery Model
SGS tested several variability samples with a wide range of head grades for rougher flotation. The results are plotted in the figure below (Figure 13-10). The results show that recovery for sulfide molybdenite is a function of head grade and follows the same trend regardless of lithology. They also show very poor recovery for oxidized ore, as previously observed.
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Figure 13-10: Plot of Recovery v. Head Grade (MoS2)
From the plot, SGS developed the following recovery formula for the rougher stage by non- linear regression, using all the data points for sulfide molybdenite:
-0.54 Rougher Flotation Recovery = RR = 100 - 2.33*(%MoS2)
To this recovery formula, an additional loss amounting to 4.1 percentage points is applied to account for recovery losses in the cleaner flotation sections, mechanical losses, and, by client preference, contingency for suboptimal process conditions. The overall recovery is therefore given by the following equation:
-0.54 Overall Recovery = RT = 95.9 - 2.235*(%MoS2)
Note that only sulfide molybdenum or molybdenite (MoS2) is considered in the recovery calculations, unlike the MSRDI model, which used total molybdenum (oxide + sulfide) contents. Figure 13-9 shows that oxide molybdenum is not recoverable by conventional flotation methods and samples that have no or very little oxide molybdenum have recoveries in the mid 90’s; correlating very close to the Exxon’s work.
The economic model uses the SGS formula to estimate the molybdenum production. This formula results in molybdenum recovery of 89.8% in the first five years of ore processing and 88.8% over the life-of-mine.
SGS observed that the flotation parameters are not highly dependent on lithology. Thus, the recovery model directly relates to ore sulfide molybdenum grades. SGS also did analytical work on the cleaner tailings and their work correlated very well with the work Exxon conducted and
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showed that the bulk of the molybdenite losses in the cleaners were due to sub-10 μm particles of liberated molybdenite.
Figure 13-11: Predicted Molybdenite Recovery by Year
Exxon did the only study to determine the relationship between average particle sizes in flotation and recovery. Their tests indicated that the recovery is almost flat at targeted grind of 150 μm. The design grind use for plant design falls comfortably inside this tested range.
Because both Exxon and SGS noted that sub 10 μm molybdenite is lost in the tailing, Mount Hope will be installing High Velocity (HV) cells in the rougher and cleaner scavengers. FLS has recently installed HV cells in other sites and had seen significant increases in recoveries.
Additionally, Mount Hope will implement measures to minimize the production of sub 10μm material by installing Particle Size Monitoring (PSMs) systems in primary and regrind cyclones, and a regrind bypass that can be operated when the grind is too fine.
13.2.4.3 Flowsheet Development
The first flowsheet proposed for the Mount Hope ore was designed by Exxon. It consisted of a rougher stage followed by 6 stages of cleaning, two cleaner scavenging stages (after Cleaner 1 and Cleaner 2), and two regrinds – one of the rougher concentrate and the other of Cleaner 1 concentrate.
MSRDI slightly modified this flowsheet to include 8 cleaner stages, one regrind (of the rougher concentrate) and final flotation tails coming only from the rougher bank.
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SGS conducted several batch and locked cycle tests on Mount Hope composites and analyzed the results by FLEET simulation to develop several flowsheets for consideration. The closest flowsheet modeled by SGS to the one currently in the design includes 8 stages of cleaning using mechanical cells (the current design has seven stages of cleaning, with a flotation column in seventh position). The flowsheet of the locked-cycle tests with eight stages of mechanical cleaning is shown below (Figure 13-12).
Figure 13-12: SGS locked-cycle test flowsheet with 8 cleaning stages.
Later SGS tests involving columns showed that regrind (to 25 microns) can be implemented on the Cleaner 1 concentrate, thus reducing the amount of material to be reground. This regrind location has been adopted for the current design, but only to the cleaner scavenger concentrate.
SGS flotation modeling of the 8-cleaner flowsheet based on the locked cycle tests and industrial benchmarking results in the design residence time and scale up factors shown in Table 13-4. The modeled distribution of metals in each stage is shown in Table 13-5.
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Table 13-4: Residence Times and Scale Up Factors for the Flowsheet in Figure 13-12.
Residence Time, min Scale Up Stream Lab Plant Factor Rougher1 14.0 35.0 2.5 Rougher2 14.0 35.0 2.5 Cleaner1 5.0 10.7 2.1 CleanerScav 5.0 13.8 2.8 Cleaner2 5.0 9.0 1.8 Cleaner3 5.0 9.4 1.9 Cleaner4 5.0 9.3 1.9 Cleaner5 5.0 8.2 1.6 Cleaner6 5.0 11.0 2.2 Cleaner7 5.0 13.8 2.8 Cleaner8 5.0 10.1 2.0
Table 13-5: Typical Stage Recoveries Predicted by SGS for the Flowsheet in Figure 13-12.
Stage Distribution Mass %Mo %Cu %Zn %Fe %S %NSG Recovery model model model model model model model Rougher Recovery 4.0 84.1 60.9 27.1 9.6 40.4 3.7 1st Cleaner 22.5 90.4 65.0 49.0 31.9 51.1 19.2 1st Cleaner Scavenger 19.9 71.4 47.3 49.3 28.9 35.4 19.0 2nd Cleaner 23.6 78.3 56.2 37.9 30.0 48.0 17.8 3rd Cleaner 47.5 89.5 75.0 55.1 50.2 69.6 33.5 4th Cleaner 55.2 85.4 72.0 52.7 51.6 70.5 35.8 5th Cleaner 60.6 80.9 68.5 50.9 52.8 70.4 37.1 6th Cleaner 65.1 78.2 66.3 50.6 54.8 71.0 39.9 7th Cleaner 67.9 76.3 65.0 51.3 56.8 71.4 42.9 8th Cleaner 69.3 75.3 65.0 50.4 57.6 71.8 40.1
The flowsheet that is currently in the design is a slight modification of the SGS flowsheet above. The regrind is implemented on the cleaner scavenger concentrate and the 3rd Cleaner tails. Instead of the 8 mechanical cleaning stages, the design includes 6 mechanical cleaning stages and a column cell at the 7th cleaning position.
Another slight variation in the flowsheet is the path of the 3rd cleaner tails to regrind instead of being sent to 2nd cleaner feed. The flotation times used are the same as those used by SGS for the six cleaner stages.
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Figure 13-13: Proposed Mount Hope Flotation Flowsheet.
13.3 MOLYBDENITE CONCENTRATE LEACH
A review of previous test work by Exxon and MSRI indicated an occasional need for additional treatment of the final molybdenite flotation concentrate, as they contain slight excesses of copper, lead, and zinc.
Understanding the need for further treatment of final flotation concentrates, MSRDI performed three leach tests on molybdenite flotation concentrate from the master composite and the TQP composite. Results of the leach tests are shown in Table 13-6 below. A significant reduction in the concentration of copper, lead, and zinc is readily achieved by leaching the concentrate slurry for 12 hours at 95 to 100°C with a ferric chloride (FeCl3) at a concentration of 1 mole/liter.
Table 13-6: Concentrate Leach Test Results ASSAYS, % FINAL FLOAT BEFORE LEACH AFTER LEACH Conc ID Composite Cu Pb Zn Cu Pb Zn 9-5 MC 0.84 0.135 0.021 0.012 0.009 9-6 MC 1.46 0.57 0.58 0.018 0.010 0.008 13 TQP 0.06 0.04 0.14 0.005 0.016 0.003 <0.45 <0.045 <0.10
It is important to note that it will not always be necessary to leach the molybdenite concentrate. Much of the time, concentrate received from flotation will meet specifications and will not
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require further treatment. However, the operating costs used in the economic model assume that all of the concentrates produced will be leached prior to roasting.
13.4 REGRIND AND CONCENTRATE THICKENERS
Settling tests to size the regrind and concentrate thickeners were not done because of the required sample volume for the continuous tests. Instead, the thickeners were sized based on established benchmarks for the same applications in the industry.
13.4.1 Regrind Thickener
The design selected for thickening of concentrate regrind overflow is one 105 feet diameter thickener, based upon FLSmidth (equipment manufacturer) benchmarking of other molybdenum thickening applications.
The regrind thickener can process flows up to 900 gal/min, at 11% feed pulp density, and produce 50% solids underflow at 150 gal/min. The overflow can process 750 gal/min of reclaimed process water.
13.4.2 Concentrate Thickener
Final concentrate thickening will utilize one 50-feet diameter thickener. This selection is based upon work conducted by Exxon. FLSmidth has also recommended this size for the Mount Hope design based on benchmarking.
The concentrate thickener is designed to process flows up to 135 gal/min at 15% feed solids and an underflow of 57% solids, at 15 gal/min. The thickener overflow handling system is designed to process 125 gal/min of reclaimed water.
13.5 TAILING TESTS
13.5.1 Settling Tests and Thickener Design
Samples of flotation test tailing were sent to three laboratories for settling tests, namely Pocock Industrial, Inc. (February 2008), FLSmidth (then Dorr-Oliver Eimco, April 2007) and to Outotec (February 24, 2008). A summary of the results of the tests for high-rate thickeners are shown in Table 13-7. The thickener diameter was calculated with the assumption that there will be two thickeners operating in parallel, to treat a total of 55,116 short tons per day, an operating time of 92% and an additional factor of 25% to account for maximum flow conditions. The thickener sizing results were similar at about 143-ft-diameters, with Pocock estimating a 161-ft upper limit.
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Table 13-7: Results of Settling Tests on Flotation Tails Laboratory Flocculant Feed Well Slurry High-Rate Thickener Density, %Solids Capacity Diameter, ft Pocock Hychem AF 302 15 – 20 5 – 6.5 m3/(m2h) 141 - 161 15 – 20 g/mt FLSmidth Magnafloc 336 15 - 20 0.04 m2/mtpd 143.4 13 – 20 g/mt Outotec Magnafloc 10 15 1.04 (mt/h)/m2 143.5 25 g/mt
Two 180-foot diameter high-capacity thickeners chosen for design, with provisions for a third thickener to allow for some conservatism in the event that low settling rate materials are encountered, such as clays. The tailings thickener system has sufficient capacity to process 72,500 t/d 25% to 30 % feed pulp density, equivalent to 33,000 to 41,000 gal/min slurry. Tailings thickener underflow design is for 55% solids and 15,000 gal/min. The overflow is capable of handling 28,500 gal/min of reclaimed process water.
13.5.2 Measurement of Cyclone Parameters for Tailing Cycloning
A 55-gallon drum of flotation test tailing was sent by MSRDI to FLSmidth Krebs for cyclone testing. The sample was thoroughly mixed, slurried and pumped through a gMax10-20 hydrocyclone. Samples of the feed, overflow and underflow streams were taken after attaining steady state. Size distribution of these samples and the operating parameters, including pulp density, solids specific gravity, pressure, and cyclone characteristic dimension, were used to calculate the alpha () and terminal density (TD) parameters for the tailing. These were found to be as follows: 7.35 TD = 55.14 These parameters were used in the Krebs model to size the tailing cyclones that will produce sand that will be part of the tailing embankment buildup.
13.6 FLOTATION AND CONCENTRATE LEACH REAGENTS
The flotation and concentrate leach reagent scheme was developed by MSRDI, and adopted by SGS with minor modifications. Table 13-8 is a summary of these reagents and their points of addition. The scheme, having been developed at laboratory scale is expected to be optimized at the startup of operations. Deviations from the proposed dosages typically are in the direction of lower addition rates in actual plant operations, which may be due to the different hydrodynamics, better mixing, reagent recirculation in process water, and potentially oil recycling from the concentrate dryers.
Other reagents associated with the roaster gas scrubbers have been estimated from the predicted SO2-gas content of off gas. This is mainly lime for neutralization, estimated at about 1.559 lb/st of ore feed.
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Table 13-8: List of Recommended Flotation Reagents Reagent Dosage, lb/st Points of Addition Fuel Oil No. 2 Flotation 0.238 Rougher Flotation MIBC 0.024 Cleaner 3 - 7 Fuel Oil No. 2/MIBC Blend 0.04 Cleaner 1 & 2 0.04 Rougher Flotation Pine Oil 0.04 Cleaner Flotation Flomin D-910 0.08 Cleaner Flotation Ferric Chloride 40% w/w 0.001 Concentrate Leach Hydrochloric Acid, 40 %w/w 0.001 Concentrate Leach 0.05 Rougher Flotation Na-metasilicate 0.24 Cleaner 3 - 7 Lime 0.50 SAG Mill Cytec AERO 7260 0.040 Rougher Flotation Witconate 90 0.014 Rougher Flotation Flocculant 0.026 Thickener Antiscalant 0.001 Water System
13.7 PRODUCT SPECIFICATIONS
Typical final unleached concentrate, leached concentrate and expected TMO product assays are listed below in Table 13-9. Given the low amount of final concentrate produced in bench-scale testing, the actual concentrate could contain higher insoluble content, based on benchmarking molybdenum industrial operations.
Table 13-9: Comparison of Concentrate Assays Molybdenum Products, % Assay Leached Mount Hope Element Flotation Flotation Estimated Concentrate Concentrate TMO Product Molybdenum 52.9 56.2 63.6 Iron 2.4 2.5 2.8 Insoluble 2.8 3.0 3.4 Copper 0.790 0.015 0.017 Lead 0.250 0.013 0.015 Zinc 0.360 0.006 0.007 Phosphorus 0.03 0.03 0.03 Sulfur 36.00 39.00 0.09 Arsenic 0.025 n/a 0.010 Carbon n/a n/a 0.09
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14 MINERAL RESOURCE ESTIMATES
The Mount Hope block model that has been used in this feasibility update is based on the same data and uses the identical statistical estimation methods as the previous model assembled by IMC during 2009.
The model for this study will be referred to as the July 2012 model and the primary change from the previous models is a modification of the bench height from 50 ft to 40 ft. Mine equipment that is being planned for Mount Hope is better suited to a 40 ft bench height, consequently the change in procedure.
The actual assembly of this model was completed by Telesto of Reno, Nevada during 2012. Telesto is now known as Welsh Hagen Associates. The procedures that were applied by Telesto are reported as identical to the procedures established by IMC in 2009.
IMC obtained the Telesto estimated model from GMI and checked the model results against those completed by IMC in 2009 with the 50 ft model. The resulting checks confirm that the IMC procedures were used, and as a result of those checks, IMC and John Marek (QP) have accepted responsibility for the 40 ft model.
Table 14-1 summarizes the model location and block size.
Table 14-1: Block Model November 2009 Mount Hope Block Model Minimum Maximum Number of Blocks Easting Limits 1,866,000 1,875,760 122 Northing Limits 14,447,200 14,455,440 103 Elevation Limit 3,900 8,460 114 Model Coordinate System UTM, NAD 83 in Feet Aligned North-South, and East-West on the UTM Grid Block Size 80 ft NS 80 ft EW 40 ft Bench
Each model block contains rock type and alteration codes, as well as grade estimates for the metals that are required for the development of the mine plan and Acid Rock Drainage (ARD) estimates.
14.1 GEOLOGY AND ALTERATION CODING
Wire frame assignments of rock type and alteration were provided by Mark Osterberg at Mine Mappers, Inc. The wire frame information was coded into the block model on a nearest whole block basis. IMC reviewed the interpretation and spot checked it against the geologic logs and found the interpretation to be reasonable.
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Table 14-2, summarizes the rock type and alteration codes as assigned to the block model.
Table 14-2: Rock Type and Alteration Codes Rock Type Units Abbreviation Code Description Hf 10 Hornfels QP 20 Quartz Porphyry RLT 40 Rhyolite Crystal Tuff LM 60 Limestone Alteration Units Abbreviation Code Description 0 Undefined Sil 1 Silica Pot 2 Potassic Arg-Phy 34 Argillic-Phyllic
14.2 BLOCK GRADE ESTIMATION
IMC completed a thorough statistical analysis of the data to determine the best method for block grade estimation. Statistical populations of the primary metal grades were established based on the interpreted geology and the assembled database.
The database verification was discussed in previous chapters; however, the following notes are again summarized as part of the grade estimation process.
Total molybdenum assay data was collected by a number of companies over time in both parts per million (ppm) and percentage. IMC reconciled all of that information into a common variable based on percentage molybdenum.
Molybdenum oxide was recorded by both Exxon and recently by GMI. IMC completed a comparison of that information and applied the following corrections to the Exxon molybdenum data. Exxon oxide values above 1,300 ppm were removed from the database. All remaining Exxon data were factored by 0.90 to match the results of the GMI assay results.
Molybdenum oxide data in drill holes were merged and established in common units of percentage oxide molybdenum.
Assay information for several metals was capped prior to compositing for grade estimation. The cap values for those metals are as follows:
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Table 14-3: Cap Values Applied to Assays Prior to Compositing Total Molybdenum 0.75% Copper 2.0% Lead 1.0% Zinc 11.0% Tin 0.20% Silver 5.0 oz/ton Gold 0.05 oz/ton
Cap values were developed from reviews of cumulative frequency plots.
Assay data were composited to 40-ft down-hole composites. Variography and population statistics were originally developed based on the 50-ft down-hole composites of the drill hole data. The update of the model with 40-ft composites utilized the same procedures established with the 50-ft composites.
Three populations were established for block grade estimation:
1. Quartz Porphyry and Hornfels formation combined, 2. Rhyolite Crystal Tuff 3. Limestone (estimated separately, but represents minor tonnage).
Within each rock type, an indicator kriging procedure was applied to total molybdenum. Ordinary linear kriging was applied to oxide molybdenum and the accessory metals of copper, lead, zinc, tungsten, gold, silver, manganese, sulfur, and tin. A one-stage indicator process was used. An indicator discriminator of 0.025% total molybdenum was used to segregate the blocks into zones of greater than 0.025% and less than 0.025% total molybdenum. The new discriminator was based on a careful evaluation of the statistical populations by rock type and by elevation. The indicator was assigned to the model on the nearest whole block basis based on a 50-50 probability. Once the blocks were coded, total molybdenum grades were assigned by ordinary linear kriging, respecting the 0.025% total molybdenum boundary.
Table 14-4 summarizes the estimation procedures applied to the indicator boundaries. Table 14-5 summarizes the kriging estimation procedures applied to the grades.
The accessory minerals were assigned by ordinary linear kriging, respecting the two rock type boundaries as shown on Table 14-5.
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Table 14-4: Deposit Indicator Kriging Parameters
Search Radius Equal to Variogram Range, Applied to Total Mo Rock Nugget Sill Major Semi Maj Minor and Rock Code Strike Dip Plunge C0 C0+C1 Feet Feet Feet Hornfels and Quartz Porphyry 10,20 110 0 0 0.10 1.00 680 450 140
Rhyolite Crystal Tuff 40 110 0 0 0.144 0.856 500 500 140
Limestone 60 110 0 0 0.144 0.856 500 500 140
Max Composites = 10, Min Composites = 3, Max Composites per hole = 3 The 3 Rock Type Groups Above Were Hard Boundaries tbl t19l
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Table 14-5: Deposit Grade Kriging Parameters
Search Radius Equal to Variogram Range Rock Indicator Zone Nugget Sill Major Semi Maj Minor Limit on High Grade and Rock Code Strike Dip Plunge C0 C0+C1 Feet Feet Feet Grade % %of Srch Total Moly With Indicator Zones Hornfels and Quartz Porphyry, Total Moly, Mo_IMC 10,20 Gt 0.025% 110 0 0 0.10 1.00 680 450 140 0.100 58.8% 10,20 Lt 0.025% 110 0 0 0.10 1.00 680 450 140 0.100 58.8%
Rhyolite Crystal Tuff 40 Gt 0.025% 110 0 0 0.144 0.856 500 500 140 0.100 80.0% 40 Lt 0.025% 110 0 0 0.144 0.856 500 500 140 0.100 80.0%
Limestone 60 Gt 0.025% 110 0 0 0.144 0.856 500 500 140 0.100 80.0% 60 Lt 0.025% 110 0 0 0.144 0.856 500 500 140 0.100 80.0%
Max Composites = 10, Min Composites = 1, Max Composites per hole = 3 Hornfels and Quartz Porphyry were a Soft Boundary, All Other Rocks and Indicators were Hard Boundaries
Copper, Lead, Zinc, Tungsten, Gold, Silver, Manganese, Sulfur, Tin by Ordinary Kriging Hornfels and Quartz Porphyry, Total Moly, Mo_IMC 10,20 None 110 0 0 0.10 1.00 680 450 140 0.10 Cu,Pb 20.6% 0.20 Zn Rhyolite Crystal Tuff 40 None 110 0 0 0.144 0.856 500 500 140 0.10 Cu,Pb 28.0% 0.20 Zn Limestone 60 None 110 0 0 0.144 0.856 500 500 140 0.10 Cu,Pb 28.0% 0.20 Zn Max Composites = 10, Min Composites = 1, Max Composites per hole = 3 High Grade Search Limit Applied to Copper, Lead, and Zinc. No High grade limit applied to other metals in this goup. Hornfels and Quartz Porphyry were a Soft Boundary, All Other Rocks and Indicators were Hard Boundaries
Oxide Moly by Ordinary Kriging Hornfels and Quartz Porphyry, Total Moly, Mo_IMC 10,20 None 110 0 0 0.10 1.00 680 450 140 No HG Limit
Rhyolite Crystal Tuff 40 None 110 0 0 0.144 0.856 500 500 140 No HG Limit
Limestone 60 None 110 0 0 0.144 0.856 500 500 140 No HG Limit
Max Composites = 10, Min Composites = 3, Max Composites per hole = 3 Hornfels and Quartz Porphyry were a Soft Boundary, All Other Rocks and Indicators were Hard Boundaries Oxide Moly Set Equal to Total Moly if Kriging result Exceed Total Moly Value Fltmoly = Sulfide Moly = Total Moly - Oxide Moly, mo
14.3 ESTIMATION OF SULFIDE MOLY
The molybdenum oxide assays were composited as described previously, and ordinary linear kriging was applied to establish percent molybdenum oxide grade. The molybdenum oxide values were clipped so that molybdenum oxide never exceeds total molybdenum. The molybdenum oxide grade estimation parameters are illustrated on Table 14-5.
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Once the percentage molybdenum oxide was available in the blocks, it was used to estimate the sulfide molybdenum grade by subtraction. The resulting sulfide molybdenum was estimated as a block model variable and used for mine planning economics. The variable was called “Fltmoly” and is equal to:
Fltmoly = % Total molybdenum - % Oxide molybdenum.
Fltmoly or sulfide molybdenum is amenable to flotation. On that basis, all mine planning economics, process recovery, and cutoff grades were based on the sulfide molybdenum variable called “Fltmoly.”
14.4 DENSITY
Density was updated in the block model and stored by rock type. All mine planning procedures including the tabulation of mineral reserves and mineral resources utilized the density by rock type.
There are 3,227 density measurements that were completed by IGMI and GMI from the recent drilling completed in 2007 through 2009. The average densities from those tests result in the following averages by rock type and the overall average of 12.66 cu ft/ton.
Individual rock type density:
Vinni Hornfels 12.29 cu ft/ton Quartz Porphyry 12.67 cu ft/ton Rhyolite Tuff 13.09 cu ft/ton Limestone 12.30 cu ft/ton
14.5 CLASSIFICATION
Confidence or classification codes were assigned to the block model based on the kriged standard deviation of total molybdenum, and the number of drill holes and composites used for block estimation. The measured and indicated confidence codes were defined as follows:
Measured Confidence for Molybdenum, Code = 1
Kriged Standard Deviation < =0.56, and At least 4 drill holes used to estimate the block Number of composites used to estimate the block >=10
Indicated Confidence for Molybdenum, Code = 2
Kriged Standard Deviation < =1.00, and At least 2 drill holes used to estimate the block Number of composites used to estimate the block is >= 4
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A background confidence code of "3" or inferred was set as a default value in the Mount Hope block model.
The above terms of measured, indicated, and inferred are based on the classifications referenced in NI 43-101. Only measured and indicated category have been used in the mine plan, and as a result of successful completion of the feasibility study, became proven and probable reserves. Inferred category has been treated as waste within the mine planning for Mount Hope.
14.6 SULFUR AND CARBON FOR ARD MODELING
Sulfur and carbon were assigned to the block model as potential input to the determination of ARD response of the waste rock. The sulfur and carbon estimates have no impact on the statements of mineral reserves or mineral resources.
The sulfur and carbon models were assembled from the LECO carbon and sulfur values that were tested by SRK during 2007. SRK assembled pulp composites from the existing drilling at Mount Hope. SRK composites averaged 47.8 ft long with the shortest being 3 ft and the longest averaging 71 ft. Since these were already nominal 50-ft composites, they were used directly for the grade estimation and were not “re-composited”. There has been more recent drilling completed by GMI with ICP sulfur. However, this information was not used due to issues in repeatability between ICP and LECO discussed earlier.
The number of samples that were available for estimation of sulfur and carbon are:
Number = 2897 Mean LECO Sulfur = 0.423% Mean LECO Carbon = 0.348%
Rock types and alteration codes that were assigned to the model in 2009 were checked as population boundaries.
The Rhyolite rock type is also the argillic-phyllic alteration zone. So, a rock type boundary represents an alteration boundary in this case. Silicic alteration closely parallels the Quartz Porphyry (QTP) boundary and the potassic alteration closely parallels the Vinni Hornfels interpretation.
The basic statistical parameters were reviewed along with nearest neighbor statistics across the rock type and alteration boundaries. The Vinni-QTP and the silicic-potassic boundaries do not represent hard boundaries for the estimation of sulfur or carbon. There is zoning of the data that is sub-parallel to those boundaries but the boundaries are not clear separations between the populations. The rhyolte-argillic-phyllic material is sufficiently different that it was used as a boundary for the estimation of both sulfur and carbon.
The model used a one stage indicator to break the continuity of the distribution and limit the long range “smearing” of high grade samples. The indicator break for sulfur was set at 0.30% sulfur. This was driven partially by statistical response but also by the 0.30% cutoff agreement for FPAG rock that was established with the BLM. The indicator break for carbon was set at 0.10%
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based on our interpretation of the cumulative frequency plots in each rock type and alteration type.
The grade estimation procedure for sulfur and carbon were as follows:
1. The SRK composites were assigned an indicator value for both sulfur and carbon based on the discriminators of 0.30% and 0.10%, respectively. For example, sulfur composites above 0.30% were assigned a value of 1.0. Those below were assigned a value of 0.0.
2. The 1.0 and 0.0 values were input into ordinary linear kriging and assigned to the blocks resulting in fractions of 0.0 to 1.0 assigned to the blocks. Blocks above a 0.30% indicator value were contoured and coded as plus 0.30% blocks (Inside blocks). The discriminator value of 0.10% was used for carbon.
3. The composites were now coded if they were inside or outside of the indicator zones. Grade estimation was completed for the inside and outside zones using ordinary linear kriging. The zone boundaries were respected as “hard” boundaries in the estimation process.
Table 14-6 summarizes the search radii and estimation parameters that were used to set the indicators and to assign grade within each zone. The rhyolite and limestone rock type boundaries were also treated as “hard” boundaries in this process.
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Table 14-6: Grade Estimation Parameters Sulfur and Carbon Grade Estimation Parameters Sulfur Rock Type Composites Max Search ft Nugget / Indicator To Estimate Used for Estimate Bear of Max Total Sill Discriminator
Vinni + Qtp Vinni + Qtp 900 x 600 x 210 0.10 / 1.0 0.30% Sulf 110 Deg
Rhyolite Rhyolite 900 x 600 x 210 0.10 / 1.0 0.30% Sulf 110 Deg
Limestone Limestone 900 x 600 x 210 0.10 / 1.0 0.30% Sulf 110 Deg
Same Procedure Applied to Inside and Outside the Indicator Zones Indicator Zones treated as Hard Boundaries.
Carbon Rock Type Composites Max Search ft Nugget / Indicator To Estimate Used for Estimate Bear of Max Total Sill Discriminator
Vinni + Qtp Vinni + Qtp 900 x 600 x 210 0.10 / 1.0 0.10% Carbon 110 Deg
Rhyolite Rhyolite 900 x 600 x 210 0.10 / 1.0 0.10% Carbon 110 Deg
Limestone Limestone 900 x 600 x 210 0.10 / 1.0 0.10% Carbon 110 Deg
Same Procedure Applied to Inside and Outside the Indicator Zones Indicator Zones treated as Hard Boundaries.
All grade estimations used a maximum of 10 composites, a minimum of 1 composite, and a maximum of 3 per hole. One composite value could be spread outward 900 ft.
Once the grades of sulfur and carbon were assigned to the blocks; a second kriging run was completed to guide the assignment of relative confidence or classification codes.
The second kriging run was based on ordinary linear kriging with the following search:
680 x 450 x 140 ft (110 bearing, 20 bearing, vertical). Respecting Rock Types
The above parameters parallel that which was applied to the estimation of molybdenum grades. The distance and number of composites applied to that estimate were used to assign relative codes of sulfur confidence to the model. The terms of measured, indicated, proven, etc. have not been used to avoid confusion with the estimations of ore.
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The logic for classification was as follows from least to most confident:
1) If a sulfur grade was assigned Code = 30 Marginal 2) If the closest composite was within 600 ft Code = 20 Acceptable 3) If 10 composites were used in the estimate Code = 10 Good
Blocks that were estimated outside of the 680 x 450 ft search were automatically called “Marginal”. Once inside the 680 x 450 search, the split was based on a requirement to be within 600 ft of the nearest composite for indicated.
14.7 MINERAL RESOURCES
The mineral resource is defined as low grade material and inferred mineralization within the planned open pit. The cut-off grade of the low grade stockpile within the mine plan is set at 0.034% molybdenum sulfide (%SulfMo). The 0.034% SulfMo cut-off is used to define the mineral reserve as defined in Section 15. The floating cone parameters as presented on Section 15 combined with a molybdenum price of $14.00/lb result in an internal cutoff grade of 0.025% SulfMo. The mineral resource is the material within the designed final reserve pit with a cutoff grade of 0.025% SulfMo.
The mineral resource as presented below in Table 14-7 is material in addition to the mineral reserve. The following material within the defined reserve pit is used to define the mineral resource.
Cutoff Grades for Mineral Resource
Measured and Indicated Material with Cutoff Grade of: 0.025% to 0.034% Sulfide Molybdenum Inferred Material with Cutoff Grade of: 0.025% Sulfide Molybdenum
The resulting mineral resources as defined by NI 43-101 are summarized on Table 14-7.
The Qualified Person for this statement of mineral resources is John Marek of IMC. In reviewing and verifying this statement of mineral resources, the Qualified Person has not identified any unusual items of risk that would not be incurred in the development of any other base metal open pit within the United States.
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Table 14-7: Mineral Resources – December 14, 2013 Mineral Resources in Addition to Reserves Cutoff Tons Sulfide Classification Sulfide Mo X 1000 Mo %
Measured 0.025% to 0.034% 12,976 0.033 Indicated 0.025% to 0.034% 52,267 0.033 Measured + Indicated 0.025% to 0.034% 65,243 0.033
Inferred 0.025% to 0.034% 11,945 0.031 +0.034% 99,316 0.059 Total Inferred +0.025% 111,261 0.056
Mineral Resources are in addition to and not contained in the Mineral Reserves Tons are dry short tons of 2,000 lbs Grades are Sulfide Molybdenum Percent by Weight
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15 MINERAL RESERVE ESTIMATES
The mine plan and the corresponding mineral reserves were developed by the mine planning staff at EMLLC. The mine plan and mineral reserve were reviewed by IMC so that John Marek of IMC, Inc. is acting as the Qualified Person for this section and this statement of mineral reserves.
EMLLC used the Lerch Grossman pit design algorithm, herein referred to as a floating cone, during 2013 to establish the initial guidelines for mine planning. Both the final pit location and the extraction sequence were suggested by the floating cone algorithm. Initial estimates of mining cost, processing cost, recoveries, and a broad range of metal prices were used to report multiple floating cone results. The final pit design that was utilized by EMLLC is nearly identical to that used since 2007.
Table 15-1 summarizes the 2013 input data for the floating cone runs. These are not the final project costs, but reflect initial estimates as a starting point for design. Most of the cost and recovery data were developed from mine planning in 2012 – 2013 by EMLLC and its contractors.
A number of cones were run at molybdenum prices ranging from $8.00 to over $14.00/lb molybdenum. EMLLC selected $12.00/lb molybdenum as the base price for project final pit design and evaluation. The results of that cone confirmed that the final pit design that was developed in in previous years is robust and slightly conservative.
The parameters on Table 15-1 result in an internal cutoff grade of 0.029% SulfMo and a breakeven cutoff grade of 0.035% SulfMo. In an effort to stay consistent with previous reserve statements and to assure a stockpile grade that is economically robust, the 0.034% SulfMo cutoff was used to define mineral reserves as in previous studies.
Economic benefit was applied to Measured and Indicated class material only when establishing the mineral reserves. Inferred mineralization was treated as waste in the mine plan and in the determination of mineral reserves.
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Table 15-1: Floating Cone Input Parameters Mining Cost 1.127 $ / ton total material Add Haul Increment $0.03 $ / 50ft bench below 6850 bench
Process Cost year 1-11 $4.628 $ / ton ore
Process Recovery 86%
General and Administration (Overheads), 20,117 kt/yr $6.2 million / year $0.732 $ / ton ore
Molybdenum Roaster Recovery 99.20%
Molybdenum Leach/Roaster Cost $0.655 $ / lb Mo
Slope Angles Variable Around Pit, Average 45 Slope Angles Range from 41 to 49 degrees
Royalties 5.5% NSR Royalty
Discount for Depth 3% per bench
Metal Prices Final Pit Based on $12.00 $/lb Mo Multiple cones were run at a range of prices
The floating cones were used as a guide to develop eight pushbacks or phases for development of a practical mine plan and schedule. Inter-ramp slope angles for the phase designs were provided by the geotechnical contractor CNI. The physical parameters used for phase design are summarized below:
Slope angles for final pit Variable 41° to 53° inter-ramp Haul road width 120 ft Haul road grade 10% maximum
The mineral resource is that tonnage with a grade between 0.025% sulfide molybdenum and the stockpile cutoff grade of 0.034% sulfide molybdenum and inferred material above 0.034% sulfide molybdenum contained within the planned pit. The Mineral Resource is an addition to the reserve and not included within it.
Table 15-2 summarizes the mineral reserves. John Marek of IMC, Inc. is the Qualified Person for the statement of mineral reserves and mineral resources. In the course of preparing and reviewing this statement of mineral reserves and resources, the Qualified Person has not identified any additional risk that beyond that which could occur with the development of a base metal project in the United States.
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Table 15-2: Mineral Reserves and Mineral Resources – December 14, 2013 Mineral Reserves Cutoff Tons Sulfide Classification Sulfide Mo X 1000 Mo %
Proven 0.034% 320,473 0.084 Probable 0.034% 664,129 0.063 Proven + Probable 0.034% 984,602 0.070
Mineral Resources in Addition to Reserves Cutoff Tons Sulfide Classification Sulfide Mo X 1000 Mo %
Measured 0.025% to 0.034% 12,976 0.033 Indicated 0.025% to 0.034% 52,267 0.033 Measured + Indicated 0.025% to 0.034% 65,243 0.033
Inferred 0.025% to 0.034% 11,945 0.031 +0.034% 99,316 0.059 Total Inferred +0.025% 111,261 0.056
Mineral Resources are in addition to and not contained in the Mineral Reserves Tons are dry short tons of 2,000 lbs Grades are Sulfide Molybdenum Percent by Weight
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16 MINING METHODS
A conventional hard rock open pit mine plan was developed for the Mount Hope deposit based on the block model of the mineralization. The mining process will use standard open pit mining techniques of drilling, blasting, loading, and hauling of ore and waste to the crusher and waste storage facilities. Table 16-1 summarizes the mine plan production schedule.
The mine is planned to deliver a nominal 66,688 t/d of sulfide flotation ore to the crusher.
Low-grade material between the mill cutoff and a lower stockpile cutoff is stockpiled for later processing in years 34 through 41. The total material rate for the first 15 years of the mine life starts at 97,207 kt/yr and ramps up to 112,564 kt/yr (266,320 to 308,395 t/d). The rate decreases from year 16 through the end of the mine life.
The cutoff grades to the process plant were selected in order to maximize project return on investment. This process required the development of multiple iterative production schedules, comparing each case on a NPV basis. This optimization process compares the capital cost of total mining capacity, mine operating cost, and process operating cost against the benefit of processing higher grade ores. The best mine strategy is established by comparing NPV between alternatives and by applying practical mine operational constraints.
As a result of the optimization process, the mine plan applies cutoff grades to the process plant that are higher than calculated breakeven cut-offs for most of the mine life. Mineralization with grade between the process cutoff grade and the stockpile cutoff is stored on a low-grade stockpile for treatment later in the project life. The stockpiling and later processing of low-grade ores provides a higher project NPV by processing the higher-grade material earlier in the mine life.
The stockpile cutoff was established based on project economics and storage capacity. Lower stockpile cutoff grades could be considered; however, the selected value of 0.034% sulfide molybdenum (SulfMo) provides positive economic return when reprocessed and results in a stockpile volume that can be accommodated on the project footprint.
The low-grade stockpile is planned for processing after completion of the mine operation. The mineral reserve is therefore the total of the ore sent directly to the primary crusher and the re- mining of the low-grade stockpile at the end of the mine life.
16.1 PHASE DESIGNS
Floating cone results were used as a guide to develop eight pushback designs for development of a practical mine plan and schedule. Inter-ramp slope angles for the phase designs were provided by the geotechnical contractor CNI.
The physical parameters that were used for phase design are summarized as follows:
1. Inter-ramp slope angles 41 to 53 degree inter-ramp depending on the area 2. Haul Road Width 120 ft
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3. Maximum Haul Road Grade 10%
The phase designs are used as the basis for development of the mine production schedule. The mine schedule is developed with several major goals and constraints in mind:
Assure continued availability of the required ore to feed the process plant. Sufficient waste must be removed over time to assure ore release. Mine equipment productivities are considered when setting the mining rate for ore and waste. The matching of equipment productivity to each pushback or working area was considered. Reasonable limits are established regarding the number of benches that can be produced from each phase each year. Once the above constraints are met, the balance between total material movement and process cutoff grade are established to maximize project NPV.
The production schedule on Table 16-1 indicates several years where the cutoff is shown as a range (Years 1, 2, 14, 15). In these years, EMLLC planning staff utilized material that would normally be sent to stockpile to augment mill feed. In other words, the cutoff grade is lowered in this time periods to a value between the planned mill cutoff and 0.034% SulfMo. In those years, the material the low grade stockpile is reduced to reflect the material that is sent directly to the mill.
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Table 16-1: Mine Production Schedule – Proven and Probable Ore Only (Low Grade Stockpile Cutoff = 0.034% Sulfide Mo) Mill Feed Mill Sulfide Low Grade Stkp Total Year Cutoff Feed Mo Grade To Stkp Sulf Mo Waste Material Sulf Mo% Ktons % Ktons % Ktons Ktons
PreStrip 0.050 2,594 0.058 4,950 0.042 62,534 70,078 1 .050-.034 20,763 0.078 3,794 0.039 72,655 97,212 2 .049-.034 24,341 0.110 1,338 0.039 71,528 97,207 3 0.045 24,341 0.078 8,904 0.039 63,962 97,207 4 0.044 24,341 0.084 4,334 0.039 68,532 97,207 5 0.044 24,341 0.108 3,570 0.039 69,296 97,207 6 0.040 24,341 0.094 14,387 0.039 58,479 97,207 7 0.044 24,341 0.082 8,847 0.039 64,019 97,207 8 0.044 24,341 0.077 6,504 0.040 66,362 97,207 9 0.044 24,341 0.084 3,196 0.039 85,027 112,564 10 0.044 24,341 0.066 6,583 0.040 81,640 112,564 11 0.044 24,341 0.072 8,870 0.040 79,353 112,564 12 0.044 24,341 0.086 3,911 0.039 84,312 112,564 13 0.044 24,341 0.080 6,273 0.039 81,950 112,564 14 .044-.034 24,341 0.066 5,571 0.039 82,652 112,564 15 .044-.034 24,341 0.062 3,095 0.039 62,093 89,529 16 0.044 24,341 0.065 8,543 0.039 56,645 89,529 17 0.044 24,341 0.064 3,648 0.040 61,540 89,529 18 0.044 24,341 0.067 8,742 0.039 56,446 89,529 19 0.044 24,341 0.074 3,480 0.039 61,708 89,529 20 0.044 24,341 0.072 1,259 0.041 63,929 89,529 21 0.044 24,341 0.080 1,431 0.040 63,757 89,529 22 0.044 24,341 0.085 10,824 0.039 54,364 89,529 23 0.044 24,341 0.082 5,847 0.038 34,915 65,103 24 0.044 24,341 0.071 5,075 0.040 32,881 62,297 25 0.044 24,341 0.069 8,318 0.039 26,588 59,247 26 0.044 24,341 0.071 3,850 0.039 7,025 35,216 27 0.044 24,341 0.072 1,227 0.040 2,341 27,909 28 0.044 24,341 0.069 695 0.040 3,757 28,793 29 0.044 24,341 0.069 1,136 0.041 2,934 28,411 30 0.044 24,341 0.069 783 0.039 2,717 27,841 31 0.044 24,341 0.068 265 0.042 3,018 27,624 32 0.044 24,341 0.066 1,136 0.040 4,322 29,799 33 0.044 24,341 0.066 2,320 0.040 3,870 30,531 34 0.044 17,254 0.059 2,373 0.041 2,627 22,254
819,523 0.076 165,079 0.039 1,699,778 2,684,380
Total Ore Planned for Process 984,602 0.070
16.2 WASTE AND LOW GRADE STORAGE
Low grade between 0.034% SulfMo and the mill cutoff is stored on a lined facility to the east of the pit and north of the primary crusher. Waste is delivered to a number of locations that surround the pit.
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Waste with a sulfur grade greater than 0.30% sulfur (S) has been designated as potentially acid generating (PAG). This material will be delivered to the northeast of the pit and north of the low grade stockpile to a lined facility.
The remaining waste is hauled to short haul destinations around the pit that eventually coalesce into a large waste storage dump that surrounds the Mount Hope Pit and three sides (south, west, and north).
The open pit and waste storage geometries are illustrated on the drawings presented at the end of this section.
16.3 MINE EQUIPMENT REQUIREMENTS
The mine equipment for the Mount Hope Project has been selected by the EMLLC operational staff to meet the production requirements established in the mine plan. The selected equipment are conventional off-the-shelf units for which there is a sound history of productivity in other mines world-wide.
Drilling and loading equipment requirements were established based on calculated hourly productivities for the individual units. Typical input parameters were used based on the material densities, estimated hardness, and the work schedule at Mount Hope. Industry typical estimates of availability and utilization were applied to determine the fleet requirements.
Truck fleet requirements were determined based on haul time simulation. Detailed haul profiles for each material type to each destination were measured for each time period of the mine plan (monthlies initially and annual for the remaining mine life). Truck productivities over those profiles were calculated by haul time simulation to estimate the number of truck hours required in each period. That information was used to set the fleet and labor requirements and provide primary input to calculation of mine haulage operating costs.
The requirements for the major mine units for the mine life are summarized on Table 16-2. Minor equipment units are accounted for in the estimated mine capital costs. EMLLC maintains detailed support documentation of the number and cost of the additional units.
Table 16-2: Mount Hope Major Mine Equipment Units Equipment Type Equipment Unit Number
Blast Hole Drill Atlas Copco PV 271 5 Cable Shovel P&H 2800 XPC 2 Hydraulic Shovel Cat 6060 1 Front End Loader 994 K 1 Haul Truck Cat 793F 18 - 35 Track Dozer D10T 4 Track Dozer D8T 1 Wheel Dozer 834 H 3 Grader 16 M 3 Water Truck, 20,000 gal Cat 777 2 Secondary Drill IR ECM 780 1
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16.4 MINE LABOR REQUIREMENTS
Mine labor requirements were established by the operations group and EMLLC. Both supervisory and hourly labor staff needs have been addressed.
Salaried staff includes all personnel for management and control of mine operations and maintenance. Engineering and geology staff is included to plan and control the mine operations.
Mine salaried labor is consistent for most years of the mine life. During the primary production years the mine salaried staff members can be summarized as: 10-Operations Supervision, 12- Maintenance Supervision, 7-Geology, 12-Mine Engineering.
Mine Hourly labor varies between 174 and 274 persons during years 1 through 15 and averages 202 people. Mine maintenance hourly labor varies between 75 and 127 persons and averages 92 people for the same period.
16.5 MINE PLAN AND DUMP DRAWINGS
Figure 16-1 through Figure 16-11 show mine plan and dump drawings for Preproduction through Year 5, as well as Years 10, 15, 20, 25, and 34.
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Figure 16-1: Pre-Production Map
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Figure 16-2: Year 1 Map
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Figure 16-3: Year 2 Map
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Figure 16-4: Year 3 Map
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Figure 16-5: Year 4 Map
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Figure 16-6: Year 5 Map
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Figure 16-7: Year 10 Map
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Figure 16-8: Year 15 Map
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Figure 16-9: Year 20 Map
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Figure 16-10: Year 25 Map
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Figure 16-11: Year 34 Map
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17 RECOVERY METHODS
The Mount Hope Project will be vertically integrated from mining, to molybdenite flotation, and final roasting of MoS2 concentrate to technical-grade molybdenum trioxide (TMO). To ensure metallurgical specifications are met EMLLC will operate a concentrate leaching process as required.
Figure 17-1 is a simplified schematic of the process. Figure 17-2 shows the layout of the process plant facility along with other mine facilities.
17.1 PROCESS DESIGN CRITERIA
EMLLC tasked M3 Engineering to design a process plant for the Mount Hope Project with a nameplate capacity of 66,688 tons per day or 24,340,938 tons per year, with tonnage variations arising from variability in the hardness of the ore. At this rate, ore will be available to feed the mill for approximately 41 years.
The Mount Hope deposit is classic molybdenum porphyry, typified by the deposit at Climax, Colorado. This type of deposit has well zoned molybdenum mineralization. The mineral zones consist of quartz porphyry rock that has been veined by quartz stockwork containing molybdenite. The main form of molybdenum mineralization is molybdenite (MoS2), developed within porphyritic igneous rocks and in Vinini hornfels.
For the design, M3 used an availability factor of 92%, except for the primary crushing area where the availability factor is 75%. These design availability factors are common for current and recent projects at M3. For simplicity, M3 defines “availability” as the estimated actual run time of equipment. This would, therefore, include both “mechanical availability” and “use of mechanical availability” factors in an operating plant.
Table 17-1 is a summary of the main components of the process design criteria used for the study.
Design ore grade to the process plant is 0.085% floatable molybdenum (fltMo). This grade represents the 80th percentile grade of the ore blocks meeting the mill cutoff grade of 0.045% fltMo. At this grade, the overall flotation recovery is predicted to be approximately 90%. The ore grade for the first 34 years is expected to average 0.076% fltMo.
Mined tonnage with grades below the mill cutoff grade but better or equal to 0.034% fltMo are sent to the stockpile, to be processed when the mine has ceased operation.
The life-of-mine grade is 0.070% fltMo with an overall recovery of 88.8% fltMo.
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Table 17-1: Process Design Criteria Elements
Process Parameter Design Primary Crushing Feed F80, mm 400 Product P80, mm 150 Crushing work index, kWh/t 12.3 SAG Mill Grinding Feed F80, mm 150 Product P80, mm 2.8 SAG Index, SPI (tested), min 44 SAG Index, SPI (design), mm 49 Ball Mill Grinding Feed F80, µm 3,000 Product P80, µm 150 Bond Ball Mill Work Index (tested), kWh/st 10.7 Bond Ball Mill Work Index (design), kWh/st 11.8 Flotation Times, min Rougher 31 1st Cleaner 25 Cleaner Scavenger 25 2nd Cleaner 12.5 3rd Cleaner 12.5 4th Cleaner 12.5 5th Cleaner 12.5 6th Cleaner 12.5 7th Cleaner -
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Figure 17-1: Simplified Process Flow Diagram for the Mount Hope Project
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Figure 17-2: Mine Facilities and Process Plant
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17.2 PROCESS DESCRIPTION
The following items summarize the process operations required to extract molybdenum from the Mount Hope ore:
Crush the ore with a primary gyratory crusher to reduce the ore size from run-of-mine (ROM) to minus 6 inches (150 mm). Stockpile primary crushed ore and then reclaim with feeders and conveyor belt. Reduce the size of the ore in a semi-autogenous (SAG) mill - ball mill grinding circuit prior to processing in a flotation circuit. The SAG mill will operate in closed circuit with a SAG mill trommel screen and a vibrating screen. The ball mills will operate in closed circuit with hydrocyclones. Produce a molybdenite concentrate by the flotation process. The molybdenite flotation circuit will consist of rougher flotation, followed by six stages of cleaning in mechanical flotation cells. A flotation column will be included as a contingent 7th cleaning stage, in case the concentrate of the 6th cleaner bank fails to meet the final concentrate grade requirement or impurity specifications. Dewater and dry the final cleaner flotation concentrate and transport it to either packaging or the roaster circuit. Alternatively, the final cleaner flotation concentrate may be leached in a ferric chloride leach circuit to remove copper, lead, and zinc impurities, if they are above acceptable limits in the concentrate. The leached concentrate will be dewatered, dried, and transported to either packaging or to the roaster circuit. Roast the molybdenite concentrate in a multiple hearth roaster to produce technical grade molybdenum oxide. The molybdenum oxide will be transported to product packaging and packed in containers for shipment.
Off-gas from the roaster will be treated to remove particulates, SO2, and SO3. Off-gas treatment equipment will first clean the gas by removing particulate matter using cyclones and electrostatic precipitators. Following gas cleaning, a lime scrubber will remove sulfur oxide gases. A bleed stream from the lime scrubber system will be sent to the tailing impoundment. Dewater the flotation tailing in thickeners and pump the tailing to a tailing impoundment area. Recycle water from tailing and concentrate dewatering for reuse in the process. Plant water stream types include: process water, fresh water, potable water, and fire water. Store, prepare, and distribute reagents used in the flotation process. Reagents include: fuel oil (molybdenite collector), pine oil (frother), methyl isobutyl carbinol (MIBC, frother), Witconate 90 (sodium alkyl-benzene-sulfonate, wetting agent), sodium meta- silicate (Na2SiO3, dispersant), Flomin D-910 (Noke’s reagent, copper mineral depressant), lime (CaO, pH modifier), and flocculant. Store, prepare, and distribute reagents used in the leaching and packaging process. Reagents include: ferric chloride (FeCl3) and hydrochloric acid (HCl).
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Ancillary buildings for this project include a mine maintenance facility (truck shop), analytical laboratory, administration building, safety building, employee change rooms, mine, and mill maintenance shop and a warehouse.
17.3 METSIM MASS BALANCE
The process mass balance was developed for the Mount Hope Project using MetSim software. The process simulation assumed several head grade and recoveries, which are listed in Table 17-2. The plant was designed using parameters representing the 80th percentile of the ore grade while the mine is operating with a cut-off grade of 0.045% fltMo. Low and high flows were also simulated to cover fluctuations in the mill feed.
Table 17-2: Head Grade and Recoveries for Mass Balance Simulations Simulation Run Head Grade, % Recovery, % fltMo Design, 80th percentile 0.085 89.48 Low 0.04 86.26 High 0.12 91.18
Results of the MetSim simulation are included in the process flow diagrams as stream tables that track the solids and solution flow throughout the plant. These flows include any recirculating streams resulting from all concentrate and tailing handling and water recycling. The results of the base case simulation, along with the results for the low and high flows, form the basis for design of pipes, pumps, flotation cells, hydrocyclones, sumps and other storage in the plant. Details of the simulations are included in the appendices.
17.4 PRIMARY CRUSHING AND OVERLAND CONVEYING
ROM sulfide ore will be trucked from the mine to the primary crusher where it will be dumped directly into the crusher dump pocket, which feeds a 60” x 89” gyratory crusher (800-hp motor). A hydraulically-operated, pedestal-mounted rock breaker will be installed at the dump pocket. Servicing the crusher area will be a 100/15-ton maintenance bridge crane with 100-hp and 25-hp hoist motors. The dump and surge pockets will be capable of handling 380-ton haul trucks, for a potential future upgrade in mining equipment.
Primary crushed ore will be withdrawn from the crusher discharge pocket by a variable-speed pan feeder. The pan feeder will feed a conveyor belt that will discharge to an ore stockpile. Crushing production rate will be monitored by belt scale mounted on the conveyor. Tramp iron will be removed using a magnet that will be located at the discharge of the crusher discharge pan feeder. A metal detector will be installed over the conveyor.
Dust control in the crushing area will be by a dry-type dust collector system. A wet dust suppression system will be installed to control dust at the crusher dump pocket and at the discharge point of conveyor to the ore stockpile.
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17.5 COARSE ORE STORAGE
Primary crushed ore will be stockpiled on the ground in a conical, coarse ore stockpile. A reclaim tunnel will be installed beneath the stockpile. The stockpile will have approximately 66,000 tons of live ore storage and 212,000 tons of total storage. Ore will be moved from the “dead” storage area to the “live” storage area by a bulldozer.
Ore will be withdrawn from the coarse ore stockpile by four variable-speed pan feeders (two operating and two stand-by). The feeders will discharge to a conveyor belt that will feed the SAG mill. A belt scale mounted on the SAG-feed conveyor will monitor the ore-reclaim rate. Grinding balls will be added to the SAG-feed conveyor via a ball counting/loading system.
Dust control in the Coarse Ore Stockpile Area will be by dry type dust collector systems. They will be installed at the discharge of the reclaim pan feeders.
17.6 GRINDING AND CLASSIFICATION
Ore will be ground to rougher flotation feed size in a SAG mill-ball mill (SAB) primary grinding circuit. A pebble crusher is planned in the future in anticipation of harder ore being mined.
The SAG mill will operate in closed circuit with a trommel screen and vibrating screen, both with a slotted screen opening of 11 mm. The undersize of the trommel screen and the vibrating screen will flow by gravity to the primary hydrocyclone feed pump box. Trommel oversize will feed the vibrating screen. Vibrating screen oversize will be transported by three conveyors operating in series to the SAG feed conveyor. A belt scale mounted on the third conveyor will monitor the SAG mill recycle rate.
Two ball mills, operated in parallel and in conjunction with hydrocyclones, will further grind the SAG-mill discharge to the final grind. Both ball mills will discharge into the hydrocyclone pump box, where the discharge slurry will combine with the screened SAG-mill discharge. The blended slurry is diluted with water in the pump box, and then pumped to the hydrocyclone clusters by variable-speed horizontal centrifugal pumps. The hydrocyclone underflow will be returned by gravity to the ball mills, while the overflow, having the target grind, will be advanced to the flotation circuit. The target grind for the grinding circuit is 80% finer than 150 µm.
A metallurgical-grade sampler will sample the hydrocyclone overflow from each cluster. One sample stream will be analyzed by an online particle size monitor. The sampler will also cut a representative shift sample for metallurgical accounting.
Grinding balls will be added to ball mills by using a ball bucket and ball counting systems. The ball bucket will be loaded from the ball bin by a ball loading system.
Lime slurry will be added to the SAG mill feed and to the ball mill with the hydrocyclone underflow stream, to adjust the pH of the slurry.
Table 17-3 is a list of the major equipment to be installed in the grinding circuit.
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Table 17-3: Major Equipment in the Grinding Area Equipment Number Description Drive/Motor SAG Mill 1 36’ x 17’ EGL, 19’ F/F 18,100 hp (13.5 MW) wraparound GMD Trommel 1 13.1’ x 13.1’ (4mx4m) effective Vibrating Screens 1 installed, 1 standby on 12’ by 24’, 11 mm opening 100 hp rails for quick change over Ball Mill 2 22’ x 36.5’ EGL, 37’F/F, Dual low-speed Overflow synchronous motors, 6,500 hp ea (9.7 MW total), VFD Cyclone Feed Pump 2 installed, 1 standby Horizontal centrifugal; 28 x 2,500 hp, VFD (uninstalled) 26 - 64 MMF slurry pump Cyclone Clusters 2 10-place cluster with 8 operating and 2 standby gMax33-20 cyclones Pebble Crusher 1, future installation, Short-head cone crusher 900 hp approx. Year 8 of production
17.7 FLOTATION PLANT
The flotation circuit will consist of rougher flotation cells, first cleaner and first cleaner scavenger flotation cells, concentrate regrind circuit, second, third, fourth, fifth and sixth cleaner flotation cells. A flotation column cell will be used as a seventh cleaning stage in case the sixth cleaner flotation concentrate does not meet specifications.
The flowsheet was modified from one of the SGS locked-cycle tests results, consisting of eight stages of cleaning (mechanical cells). Instead of the tails from each cleaning stage returning to the previous stage, this flowsheet sends the tailing from the 3rd cleaning stage back to regrind, as shown in Figure 17-1.
Table 17-4 is a summary of the flotation design parameters, design volumes and equipment proposed for the flotation plant. Slurry flows shown are those obtained from the base-case MetSim balance at 0.085% fltMo (80th percentile head grade at 0.045% fltMo cutoff). The recommended volume for each stage is designed to accommodate high flow conditions as determined by the MetSim simulation.
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Table 17-4: Flotation Plant Equipment Stage Lab Float MetSim Required Flotation Cells Total Volume, time, Flow, Volume, min m3/h m3 No. Volume, m3 m3 Rougher 14 6,868 4,514 18 257 4,626 First Cleaner 10 642 315 4 100 400 Cl. Scavenger 10 604 296 4 100 400 2nd Cleaner 5 186 45.7 7 8.5 59.5 3rd Cleaner 5 100 24.4 4 8.5 34 4th Cleaner 5 76 18.7 6 4.2 25.2 5th Cleaner 5 62 15.3 5 4.2 21 6th Cleaner 5 56 13.6 5 4.2 21 7th Cleaner 5 35 8.5 1
17.7.1 Rougher Flotation
Hydrocyclone overflow from the ball mill circuits will flow by gravity to the rougher flotation circuit. The rougher flotation circuit will consist of two rows of rougher flotation cells, each row dedicated to one ball mill line.
The flotation concentrate from the two rows will flow by gravity to the rougher concentrate sump and will be pumped to the first cleaner flotation cells. Tailing from the rougher flotation cells will flow by gravity to the final tailing dewatering circuit.
Rougher flotation concentrate from each rougher row will be combined and sampled for process control. Tailing from each rougher flotation row will be combined and sampled by sample system for process control.
17.7.2 First Cleaner and First Cleaner Scavenger Flotation
Rougher concentrate and second cleaner tailing will be combined and fed to the first cleaner flotation circuit. Concentrate from the first cleaner cells will be pumped to the second cleaner cells.
Tailing from the first cleaner flotation will proceed to the first cleaner scavenger flotation. Concentrate from the first cleaner scavenger cells will be pumped to the concentrate regrind circuit. Tailing from the first cleaner scavenger flotation cells will be pumped to the final tailing dewatering circuit. (Alternatively, first cleaner scavenger tailing will be pumped to rougher flotation distributor box and be distributed to the first cell in each rougher flotation row.)
First cleaner scavenger flotation tailing will be sampled and analyzed for process control.
17.7.3 Concentrate Regrinding
Concentrate from the first cleaner scavenger flotation and tailing from the 3rd cleaner flotation stages will report to the concentrate regrind thickener. Thickener overflow will be pumped to the common rougher concentrate launder. The thickener underflow will be pumped to the concentrate regrind area.
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Concentrate regrinding will be performed in a ball mill operated in closed circuit with hydrocyclones. Underflow from the regrind thickener will be pumped to the hydrocyclone feed pump box, where the regrind ball mill also discharges. The combined slurry will be pumped by variable speed horizontal centrifugal pump to a hydrocyclone cluster. The hydrocyclone underflow will flow by gravity to the regrind mill, while the overflow (final regrind circuit product) will flow by gravity to the second cleaner flotation circuit. (Alternatively the regrind hydrocyclone feed pump will pump directly to the second cleaner flotation circuit and the regrind mill will be by-passed.) The target grind for the regrind circuit is 80% finer than 25 µm.
Lime slurry will be added to the regrind mill feed to adjust the pH of the slurry.
17.7.4 Second Cleaner Flotation
Reground product and 1st Cleaner Concentrate will be fed to the second cleaner flotation circuit. Concentrate from the second cleaner cells will flow by gravity to a sump and be pumped to the third cleaner flotation circuit. Tailing from the second cleaner flotation cells will flow by gravity to the first cleaner flotation circuit.
Flotation reagents will be added in the second cleaner flotation circuit.
Second cleaner flotation concentrate will be sampled by for process control.
17.7.5 Third Cleaner Flotation
Second cleaner concentrate and fourth cleaner tails will be fed to the third cleaner flotation circuit. Concentrate from the third cleaner flotation cell will flow by gravity to a concentrate sump, from where it will be pumped to the fourth cleaner flotation circuit. Tailing from the third cleaner flotation cell will report to the regrind thickener.
Flotation reagents will be added in the third cleaner flotation circuit.
17.7.6 Fourth Cleaner Flotation
Third cleaner concentrate and tailing from fifth cleaner flotation will be combined and fed to the fourth cleaner flotation circuit. Concentrate from the fourth cleaner flotation cell will flow by gravity to a sump, then pumped to the fifth cleaner flotation circuit. Tailing from the fourth cleaner flotation cell will report to the third cleaner feed or have the option of reporting to the regrind thickener if the concentrate grade is too low.
Flotation reagents will be added in the fourth cleaner flotation circuit.
Forth cleaner concentrate will be sampled for process control.
17.7.7 Fifth Cleaner Flotation
Fourth cleaner concentrate will combine with the sixth cleaner tailing and be fed to the fifth cleaner flotation circuit. Concentrate from the fifth cleaner flotation cell will flow by gravity to
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sump and be pumped by horizontal centrifugal pump to the sixth cleaner circuit. Tailing from the fifth cleaner will flow by gravity to the fourth cleaner cells (combining with the third cleaner concentrate).
Flotation reagents will be added in the fifth cleaner flotation circuit.
17.7.8 Sixth Cleaner Flotation
Fifth cleaner concentrate will combine with the seventh cleaner tailing (if operating) and fed to the sixth cleaner flotation circuit. Concentrate from the sixth cleaner flotation cell will flow by gravity to a sump and be pumped by centrifugal pump to the seventh cleaner cell (column cell). Tailing from the sixth cleaner will flow by gravity to the fifth cleaner cells (combining with the fourth cleaner concentrate). Alternatively, the concentrate from the sixth cleaner flotation stage will bypass the seventh flotation cell and report to the final concentrate thickener.
Flotation reagents will be added in the sixth cleaner flotation circuit.
17.7.9 Seventh Cleaner Flotation
The seventh cleaner cell is the final flotation cleaning stage and will be used to ensure that the molybdenite concentrate meets grade specification. It will take its feed from the sixth cleaner concentrate pump box, and recycle its tailing to the sixth cleaner feed box. Concentrate from the seventh cleaner cell will be the final flotation concentrate.
The seventh cleaner flotation concentrate or, if the seventh flotation cell is bypassed, the sixth cleaner concentrate will be sampled for process control and metallurgical accounting.
17.8 CONCENTRATE DEWATERING
Flotation concentrate will report to a thickener. The thickener overflow will report to a sump, from which it will be pumped to rougher flotation concentrate launder. Alternatively, the concentrate thickener overflow water pump will pump directly to the tailing dewatering circuit.
The thickened molybdenite concentrate slurry (thickener underflow) will be stored in four agitated stock tanks. Each stock tank will be sized to contain the concentrate from 24 hours of production. After assaying the concentrate in a full stock tank, the concentrate will be either pumped to concentrate filtration or to the leach circuit.
Much of the time, about 80%, concentrate received from flotation will be “within specification” and will not need further treatment. Concentrate that is within specification will bypass the leach circuit and be filtered. Filtrate solution will report by gravity flow to the concentrate thickener if the leach circuit is not in use; otherwise, it will be sent to the neutralization tank. The filter cake will be transferred to concentrate drying by a screw conveyor.
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17.9 CONCENTRATE LEACHING
The primary purpose of the leach process is to reduce the concentration of impurities such as copper, lead and zinc in the molybdenite concentrate. The aim is to produce a technical-grade molybdenum oxide (TMO) that meets minimum specifications for impurities from the subsequent roasting stage. The impurities are reduced during the leach stage by dissolution in a hot ferric chloride-hydrochloric acid solution.
Concentrate to be leached will be pumped from the stock tanks to the leach circuit through steam heat exchanger to start heating the slurry before introduction to the leach circuit. The leach circuit will consist of six, agitated tanks operating in series. The leach tanks will be equipped for steam heat exchangers to provide temperature control to heat and maintain the slurry at about 180 °F. The tanks will be covered and vented through a water seal to a scrubber system to capture any toxic or corrosive vapors. Slurry will pass from one tank to the next by gravity flow and then discharge from the sixth tank by gravity to a standpipe.
Leached concentrate will be pumped to a filter, producing a filtrate solution that will be sent to the leached neutralization tank. The filter cake will be washed with fresh hot water to remove residual iron and chloride solution, repulped and filtered again. The twice-filtered cake will discharge to a screw conveyor that will transfer the concentrate to the drying stage.
17.10 CONCENTRATE DRYING
Filter cake (either leached or unleached) will discharge from the screw conveyor to a Holo Flite- type dryer or dryers. Dried concentrate will be conveyed to the molybdenite roaster area by a combination of screw conveyors and bucket elevators.
Heat will be supplied to the concentrate dryer via hot thermal fluid (oils). The concentrate dryer will be vented to a scrubber system with the possibility of recovering volatilized diesel, which will be recycled to the flotation circuit.
17.11 CONCENTRATE ROASTING
Multiple-hearth roasters will be employed for the roasting of molybdenum sulfide concentrate to convert the concentrate from molybdenite (MoS2) to molybdenum trioxide (MoO3). Molybdenum trioxide is the main component of technical-grade molybdenum oxide (TMO). The roasting circuit will include two roasters operating in parallel. Each roaster will have an independent hot gas handling system.
Dried molybdenite concentrate will be conveyed to the roaster feed bins by a series of screw conveyors. From there, the concentrate will be transferred to the roaster feed systems by a combination of screw conveyors and bucket elevators.
Toll concentrate can be introduced into the circuit through a super sack unloading station. Toll concentrates can be either transferred to the roaster bins or be mixed with water in the mix tank and pumped by horizontal centrifugal pump to the concentrate stock tanks in the leaching circuit.
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The concentrate will be discharged into the side of the each roaster through a feed port onto the first of twelve hearths. Propane gas fired burners will be installed in all hearths with the exception of Hearth 5 and Hearth 7. Combustion air will be provided by fan blowers. The roaster shaft will be cooled by air. The technical grade molybdenum oxide (TMO) will discharge from Hearth 12 of each roaster to water-cooled screw conveyors.
TMO from roaster will be transferred to a lump breaking circuit. The lump breaking circuit will consist of a hammer mill operating in closed circuit with a vibrating screen with a combination of screw conveyors and a bucket elevator. The screen oversize will flow by gravity to a hammer mill, closing the circuit. The vibrating screen undersize will be transferred to the TMO day storage bins. Each roaster will have its own lump breaking system.
TMO will be transferred from the TMO day bins to product packaging or recycled to the roaster feed systems.
The molybdenum oxide product may be either packaged as powder in drums or super sacks.
17.12 ROASTER OFF-GAS HANDLING AND TREATMENT
Roaster off-gas will contain sulfur dioxide (SO2) and molybdenum sulfide and molybdenum oxide particles that will have become entrained in the off-gas stream. The off-gas treatment will remove particulates by dry cyclones and dry electrostatic precipitators. This will be followed by wet gas scrubbing to remove the SO2 and finally by wet electrostatic precipitation to remove sulfuric and sulfurous acid mists.
Hot off-gas from each roaster flows through a water spray cooler, cyclones, and an electrostatic precipitator (ESP). Dust collected by the cyclones and ESPs will return to the roaster by screw conveyors.
Gases from both trains will combine and enter two operating fans and one common standby fan.
Off-gas will combine and enter a wet gas-scrubber consisting of a venturi and froth column. This will be followed by a wet electrostatic precipitator (WESP). The system will remove SO2 and any remaining recoverable particulate from the roaster off-gas, including acid mists. The scrubbed off-gas from the WESP will be discharged through a stack. Effluent slurry from the scrubber will discharge to three oxidation/neutralization tanks that will operate in series. Three air blowers will operate in parallel to provide oxidation air to the oxidation tanks. Slurry from the oxidation tanks will be pumped by a horizontal centrifugal pump to the tailing thickener.
17.13 TAILING DEWATERING
Tailing slurry from the flotation circuit will be thickened and pumped to a tailing storage facility. Coarse tailing material will be required as construction material for the tailing dam at the tailing storage facility. A single stage cyclone classification system will be installed to produce coarse sand, suitable for embankment construction, from the mill-tailing stream.
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Tailing from rougher flotation and first cleaner scavenger flotation will flow by gravity and be distributed to two tailing thickeners operated in parallel. Thickener overflow will be pumped to the process water tank. Thickener underflow will be pumped by a system of horizontal centrifugal pumps towards the tailing storage facility through two parallel pipelines. Each pipeline will terminate at a hydrocyclone station where the slurry will be classified using cyclo- wash-equipped hydrocyclones. These cyclones improve fines removal from the underflow by injecting water (reclaim water from the tailing storage facility) near the underflow discharge point. The hydrocyclone underflow (coarse sand slurry) will flow by gravity to a head tank. Hydrocyclone overflow will flow by gravity through a series of launders, drop boxes, and pipelines and will discharge through pipeline spigots around the tailing storage facility.
Coarse sand slurry will be distributed from head tank to the tailing pond embankment by a system of horizontal centrifugal pumps. The pump trains will feed two coarse sand slurry pipelines that will terminate on the tailing dam embankment, where coarse sand slurry will be deposited through pipeline spigots to construct the centerline embankment raises.
Seepage from the tailing storage facility will be collected in a seepage pond downstream of the dam and pumped to a booster station retention tank by a vertical turbine pump.
Water will be reclaimed from the tailing storage facility by pumps mounted on skids. These pumps will pump reclaim water to a booster station retention tank, where another set of turbine pumps will pump the reclaim water to a reclaim water tank. From this tank, part of the reclaim water will be pumped to supply water to the cycle-wash-equipped tailing hydrocyclones, and the remainder of the water will be pumped to the process water tank.
17.14 PROCESS CONTROL SYSTEM
The control system for the process facilities will be highly automated with instrumentation appropriate to a state-of-the-art facility. Consistent with EMLLC quality standards, extensive on- line sampling and analysis of grinding particle size and various streams throughout the flotation circuit will assist in optimizing metallurgical results and achieving the most effective and highest performance operation. The information generated will be widely accessible through operations and management information systems.
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18 PROJECT INFRASTRUCTURE
18.1 EUREKA HOUSING DEVELOPMENT
Housing will be required for employees that choose to live in Eureka. The county has developed an infrastructure design for approximately 100 single family dwellings. Fifty multifamily units are already constructed on the same site and land is available for the construction of 50 additional apartments. EMLLC also purchased land in Diamond Valley that would accommodate an RV Park and single family housing. Initial design and engineering is completed for the RV Park. EMLLC also owns a trailer park in Eureka with 34 lots and 14 trailers are currently at the site.
EMLLC feels that enough property is owned or available to meet the initial requirements of the project.
18.2 POWER
The power design for the Mount Hope Project is 75 MW. The equipment list was used as the basis for the load calculation. Two 80 MVA 230 kV-34 kV primary transformers are planned for the primary substation, providing full back-up should one fail.
Power for Mount Hope is planned to be supplied to the site via a new 25 mile, 230 kV high voltage power line. The power line will originate just north of Eureka, Nevada, at the existing Machacek substation where substantial upgrades will be required. The cost of the upgrade is delineated in the capital cost estimate.
The majority of the new 230 kV power line will be routed parallel to and abutting the existing 160-ft-wide Falcon-Gonder 345 kV power line Right of Way, and within the same 500-ft EIS study corridor as the Falcon-Gondor power line. An energy cost of $0.071/kWh was used in the feasibility study and is based on discussions between EMLLC and Mount Wheeler Power Company.
18.3 WATER
Water Rights in the State of Nevada are considered real property. A Water Right provides the legal right to use the water and is granted in Nevada by the State Engineer. GMI, through its subsidiary, Kobeh Valley Ranches, LLC (KVR), owns water rights in Kobeh Valley, where the well field will be located, in the amount of 11,300 afa (acre-feet annually) which is equivalent to 7,000 gpm (gallons per minute), and which have been permitted by the State Engineer for use at the Mount Hope Project. The State Engineer’s grant of the Project’s water permits is the subject of an appeal to the Nevada Supreme Court, Case Number 61324/63258. KVR has leased the water to EMLLC for the project. GMI also owns approximately 642 afa of water rights in Diamond Valley that are authorized for use with the Mount Hope Project. Water rights restrict the use of water to specific areas. The ownership of water rights in both valleys allows use of the majority of water in Kobeh Valley for milling and tailing deposition, and minor amounts in Diamond Valley for environmental and domestic uses.
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The proposed Mount Hope well field is comprised of 10 to 15 individual wells. There will be approximately 29.3 miles of water pipeline, two water storage tanks located with two booster stations, and approximately 28.9 miles of power distribution line.
EMLLC has leased rights to use water at the rate of 11,300 acre-feet annually (afa), which will provide the necessary water for the construction phase and for mining and milling. This is equivalent to approximately 7,000 gallon per minute continuously. The water entrained in the tailing is the largest use of water for the project. Other uses include dust control, potable and sanitary facilities. Water will be used during the construction period, primarily for road dust control and soil amendments for construction of the tailing facility and general earthworks.
Mine Pit
South Tailing Storage Facility
Well Field
4 miles
N
Figure 18-1: Well Field Location Diagram
18.4 TAILING DESIGN
The tailing storage facilities (TSF) have the capacity to store approximately 966 million tons of tailing. Annual production of tailing will be 24 million tons for the life of mining operations.
Tailing conveyance and distribution will be directed from the mill overland through a pressure rated carbon steel and HDPE pipeline to the tailing impoundment embankment. Cyclones will be located up gradient of the TSF to split tailing between sands and slimes (or underflow and overflow), respectively. Based on simulations by Krebs, five 20-inch diameter primary cyclones are required during operation and three additional 20-inch diameter primary cyclones will be
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added to the system for operational flexibility. The underflow from the cyclones will be deposited to construct the centerline embankment raises and the overflow will be deposited into the TSF.
As currently planned, the TSF will be split into north and south facilities. The south facility will be constructed first, have a capacity of approximately 790 million tons, and operate for slightly less than 33 years. This facility will have an ultimate height of approximately 370 ft. The North TSF will be constructed near the end of the south facility operational life and it will contain approximately 180 million tons or 8 years of production. It will have an ultimate height of approximately 240 ft. The capacities of the two structures have been assessed using an average tailing density of 85 pounds per cubic foot (pcf). Both structures have been designed to have downstream embankment slopes of 3:1 (3 horizontal to 1 vertical). Both facilities will be raised using a centerline construction method with cycloned sands. The crest width for the facilities will be 30 ft.
The tailing storage facilities will be compacted earth-filled starter embankments that will be constructed using native alluvial soils and development rock. The starter embankment for the South TSF will accommodate 8 months of tailing production and will require approximately 2.2 million cubic yards of random structural fill. The starter embankment for the North TSF will accommodate 1 year of tailing production and require approximately 5.5 million cubic yards of random fill or coarse cycloned sand. The embankments will be raised using cyclones with the underflow or sand portion of the cyclone split going to the downstream side of the starter embankment and the overflow or slimes portion of the cyclone split going to the basin area of the TSF. The sands or underflow portion of the split will be used for the continually raised embankment to impound the overflow or the slime portion of the tailing slurry embankment. Based on standard cyclone simulations completed by Krebs Engineers (Krebs) the cyclones will produce relatively coarse sand with a maximum of 15% passing 200 mesh that will be placed with conventional construction equipment. Cyclone technology is well proven. The sands will be placed at a geotechnical moisture content of approximately 43% and will be spread mechanically using low ground-pressure dozers.
The sands will be compacted to obtain the strength necessary to provide a structurally sound embankment. The starter embankment and the footprint of the ultimate embankment will be lined with 60-mil double textured Linear Low Density Polyethylene (LLDPE). Finger drains consisting of 4-inch diameter perforated corrugated polyethylene (CPE) pipes installed at 50 ft center-to-center spacing will be installed downstream of the starter embankment and will be covered with an 18-inch drainage blanket. The finger drains will be used to collect process water draining from the sands. This solution will be directed to the under drainage collection pond for use as dust suppression and/or process recycle.
The basin area, which is to be lined with a 60-mil LLDPE geo-membrane, includes a system of 4-inch diameter perforated CPE drainage collection pipes spaced at 100-ft center-to-center spacing that drain to larger diameter CPE header pipes. The basin includes an 18 inch thick drainage blanket (native gravelly sand). The solution collection system consists of a drainage gravel system that is augmented by collection piping consisting of perforated CPE pipes.
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Rotational tailing distribution will be utilized to direct the supernatant pond to the reclaim slot. The reclaim slot will be located in a topographic low within the basin and will have a bottom width of 150 ft and a storage depth of 30 ft. The operational pond depth is anticipated to be about 15 ft. The reclaim slot will store the supernatant solution for reuse as dust suppression on the dam and/or process recycled water. The drainage blanket within the reclaim slot is covered by a flow-retarding zone consisting of ballasted 40-mil HDPE geo-membrane. This zone prevents direct communication of ponded process solution with the drain layer. This results in limiting flows reporting to the under drainage collection pond and reduces the hydraulic head on the liner in the area of the reclaim slot. Keeping the supernatant pond located in the reclaim slot, a minimum of 700 ft from the face of the embankment will also improve the slope stability of the TSF embankment. A surface-water diversion system has been designed to collect and safely direct peak flows from storm events up to and including a Probable Maximum Flood (PMF) around the TSF impoundment. Direct precipitation on the TSF footprint can be safely contained within the facility along with projected tailing deposition.
As currently modeled through simulation, there will be sufficient sand to build the sand (downstream) portion of the embankment with approximately 75% of the underflow (total sand production from cyclone) required to satisfy construction requirements. The large sand wedge on the downstream side of the starter embankment will result in excellent slope stability for the structure with the sand offering a large buttress mass of high strength material that has excellent drainage characteristics. With the drained characteristics of the sand mass, there is virtually no possibility of liquefaction of the mass during postulated earthquake events.
Under-drainage reclaim ponds will be constructed downstream of the north and south facilities. The ponds will be lined with a double synthetic liner (80-mil HDPE). The liner will be placed on a prepared foundation that has been scarified, moisture conditioned, and rolled to a smooth surface. A solution collection system consisting of geo-net and 4-inch diameter CPE pipe will be placed between the liners to collect any leakage and direct it to a recovery sump.
Based on the seismic conditions in the area, a maximum credible earthquake (MCE) having a magnitude of 7.2 has been estimated. This event results in post-closure design earthquake peak horizontal ground accelerations (PHGA) of 0.17 g. For design purposes during the operational period, a PHGA of 0.15 g was used in the dynamic deformation analysis, which is associated with the 1,100-year return period having a 4% risk of being exceeding in a 45-year period. This is considered a reasonable level of risk for the design.
As cited above, the embankment has been evaluated utilizing the PHGA values during operational and closure conditions. Dynamic deformation analyses conducted on the TSF embankments found that minimal deformation is expected from the anticipated seismic loads. The factors of safety obtained under static conditions for circular and block type failures varied from 1.4 to 2.0. These factors of safety meet or exceed the requirements of the State of Nevada Department of Environmental Protection (NDEP) for static stability for this type of structure.
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19 MARKET STUDIES AND CONTRACTS
19.1 MARKET STUDIES
Referring to the CPM Group’s analysis in its “The Molybdenum Market Update,” molybdenum is primarily used as an alloying agent in a wide range of steels and alloys. The grayish, non- toxic metal is employed in various steels, including many stainless steel grades because of its durability, strength, and robust qualities. Molybdenum alloys have higher hot strength. The effectiveness of molybdenum in producing these effects limits consumers’ ability to substitute for other metals in its numerous applications. Demand has been not only growing in its traditional uses, but demand for molybdenum has been evolving as many industries have sought to develop new materials that benefit from its unique properties.
Molybdenum’s composition and characteristics make it an ideal choice for utilization in jet and turbine engines, aircraft parts, electrical contacts, industrial motors, nuclear energy reactors, lighting, glass manufacturing, and heat-treating ovens. The ability of molybdenum to add strength, toughness, and corrosion resistance to regular steels makes it a common ingredient in automotive, oil field, and construction applications as well. Molybdenum is also utilized in non- metallurgical applications; importantly, as a catalyst in the hydrodesulphurization of crude oil in the petroleum refining industries, specialty lubricants, and plastics.
Molybdenum demand is expected to grow at a 4.1% compound annual growth rate (CAGR) over the next ten years. Increased consumer awareness of the desirable properties of molybdenum- bearing products has strengthened the demand predictions. Furthermore, world economic growth has confirmed a direction that will require a greater amount of material suitable for extreme environments.
Additionally, CPM Group’s analysis of molybdenum end-uses shows the metals industry holding the largest market share, accounting for approximately 89% of world molybdenum consumption in 2012. This was led primarily by full alloy steel (22%), stainless steel (20%), followed by high strength low alloy steels, tool and high-speed steels, and carbon steels. Increased knowledge of specialty steels, with high molybdenum contents, in the energy sector is also spurring growth. At the onset, such specialty steels, as duplex stainless steels, were utilized in the oil and gas industry as well as chemical processes in the petrochemical industries. However, they are now being employed more extensively in applications such as flue gas desulphurization in coal and oil burning plants, as well as shale oil and gas developments, nuclear plants, and desalinization plants. The growth of green energy has been a boost for molybdenum demand as wind energy consumes five times more molybdenum per kilowatt generated than conventional generation sources and solar panels often rely on a thin molybdenum film to produce power efficiently.
As the world seeks more environmentally friendly energy sources, such as natural gas, more pipelines are to be constructed to meet this demand. Raising the amount of molybdenum content in pipeline steels provides the necessary strength for thinner walls and enhances the corrosion resistance. In turn, producers are able to reduce the total tonnage of steel used in construction of pipes, allowing for cost benefits during construction. The Energy Information Administration
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(EIA) forecasts that expanded high natural gas production will stimulate the construction of new liquid natural gas terminal capacity and pipeline infrastructure.
The growth in the demand for crude oil, in combination with the tightening of global emissions standards, will increase the demand for molybdenum in catalysts to produce cleaner fuels. Use of molybdenum as a catalyst reduces the sulphur content in cracked crude oils producing lighter fuels and diesel. As the European Union and others impose mandatory zero-sulphur petrol and oil demand grows in India, Brazil, and China, molybdenum’s demand is expected to grow as a participant in satisfying these requirements. Demand for molybdenum is inelastic as there are few substitutes for molybdenum in its major applications.
19.2 CONTRACTS
As discussed in Section 4.2, EMLLC has entered into the Mount Hope Lease with MHMI for the development of the Mount Hope Project, subject to certain terms, conditions and payment of royalties.
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20 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT
20.1 ENVIRONMENTAL STUDIES
20.1.1 Environmental Impact Statement
As mentioned in Section 4, the EIS has been completed and a ROD was issued by BLM in November 2012, approving the construction and operation of the Mount Hope Project. As part of the EIS process, technical reports were prepared for air quality, water quality, waste rock and tailing geochemistry, post-mining pit lake water quality, water quantity, wildlife, socioeconomics, soils, vegetation, noise, and cultural resources. Consultation with Native American tribes was conducted; a simulation to assess impacts to visual resources was completed; surveys of noxious and invasive weeds in the project area were conducted; and a survey of wetlands and Waters of the U.S. was conducted. The baseline reports and other surveys and simulations were used in the EIS to assess impacts to these resources. Other resources, not analyzed in stand-alone baseline reports, but assessed in the EIS document include geology and mineral resources, paleontology, livestock and grazing production; wild horses; land use; recreation and wilderness study areas, environmental justice, hazardous materials, historic trails, Native American traditional values, transportation and access, and forest products.
20.1.2 Environmental Impacts and Mitigation Measures
Issues and resources that received the most scrutiny are water quantity, pit lake water quality, facility design to protect waters of the State, waste rock management, socio-economics, the Pony Express Trail, sage grouse habitat, and Native American traditional uses. The risks that have been evaluated are listed below. Each of these risks has been addressed or mitigated by the design.
Groundwater levels in Kobeh Valley basin will be affected during water supply pumping and dewatering. Some seeps and springs may be permanently removed. Groundwater levels are expected to rebound to pre-mining or near pre-mining levels at some point after the cessation of mining and milling.
o EMLLC has leased virtually all of the water rights in Kobeh Valley, so impacts to other water rights holders are anticipated to be minor and able to be mitigated.
o Based on numeric hydrology modeling, drawdown is not anticipated to affect adjacent basins or stream flows. A monitoring plan to determine actual aquifer response to the project will be implemented.
The open pit will fill with groundwater following operations and the quality of that water will have the potential to affect wildlife, livestock, and humans that come in contact.
o The pit lake will take several hundred years to fill, based on modeling predictions, allowing time to mitigate water quality, if necessary.
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o Geochemical modeling indicates that the pit lake water will be of generally good quality and risks to receptors will be minimal.
In the absence of adequate facility design, surface and ground water quality have the potential to be degraded from process and non-process waters.
o The EMLLC design basis for the facility is to be zero-discharge.
o The tailing impoundments will be lined with a geo-synthetic liner to prevent contamination of the groundwater.
o Solution generated from rain and snowmelt that contacts reactive waste rock will be collected in a lined facility and consumed in the process circuit.
o Storm water will be controlled by structures and will exit the property through control structures. Containment facilities will be designed for a 100-year, 24-hour storm event.
o There are no waters in the project area classified as Waters of the U.S.
Approximately 26% of the waste rock is predicted to be potentially acid generating (PAG), and 74% of the waste rock is predicted to be non-acid generating (NAG) or have limited acid generating potential.
o EMLLC has conducted an extensive geochemical characterization program to classify waste rock. The mineralogy of the Mount Hope ore body is low-sulfide so even the more reactive rock is not anticipated to generate highly acidic contact waters.
o A Waste Rock Management Plan to segregate potentially acid generating material has been developed and will be implemented during mining.
o Reactive (potentially acid generating) waste rock will be placed on a low permeability liner and covered with an engineered soil cover to reduce infiltration of meteoric water.
o All solution that drains from the reactive waste rock disposal facility will be collected and used in the process circuit.
The construction and operations workforce could increase demands for housing and public and social services, and may be perceived by the local community as negatively affecting the small-town lifestyle.
o EMLLC plans to construct a RV (recreational vehicle) park to provide housing for the construction work force and a possible housing development for employees.
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o It is anticipated that the majority of the operations workforce will be bused to the site from more populous communities until additional housing becomes available in the Eureka area.
o Tax revenue from the project will far offset any cost increases incurred by the local government due to increased demand for social services.
o EMLLC has conducted an aggressive community relations program to identify and resolve community concerns and to communicate the benefits of the project to the community, and this effort has resulted in strong community support for the project.
The context and viewshed of the Pony Express Trail will be changed.
o The location of the tailing storage facility was purposely sited to minimize impact to the Pony Express Trail and the viewshed.
o EMLLC has worked with the National Park Service and Pony Express Trail interest groups to develop a mitigation plan that minimizes impacts to the trail and allow access for recreationists.
o A 450 ft. buffer was established on either side of the Pony Express Trail and the construction or installation of surface facilities within that buffer is not allowed, per the approved mitigation plan.
Decline in sage grouse population is a significant environmental concern, and the well field will be located in an area with sage grouse.
o EMLLC has developed a sage grouse mitigation plan; the BLM and the Nevada Division of Wildlife have supported the mitigation plan as the optimal approach to minimizing impacts.
o As a mitigation measure the ROD also precludes EMLLC from construction activities within 2 miles of active sage grouse leks (specific locations used by sage grouse for courtship displays) during the March 1 to May 31 mating season.
o The well field must utilize conservation elements in its design, such as low profile equipment, buried waterlines, and noise-reducing enclosures.
o As offsite mitigation, EMLLC is required to rehabilitate or enhance sage grouse habitat on approximately 13,800 acres, or provide monetary compensation per acre over a period of 25 years.
Local Native American population may lose access to areas where they have gathered pine nuts and other traditional plants.
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o EMLLC will work with local tribes by allowing access to sites for gathering pine nuts and other traditional plants, provided such access will not affect operations or pose an unacceptable safety risk.
o The surrounding region has extensive Pinion Pine (pine nut tree) growth, so loss of the area from Mount Hope is not a substantial problem.
o Similarly, traditional plants gathered by Native Americans are not limited to the Mount Hope site, and continued access to other locations in the region will serve to minimize this impact.
o Reclamation of the project area will return it to pre-existing uses, included pine nut and plant gathering.
In accordance with Nevada and BLM regulations, EMLLC will be required to estimate reclamation costs based on a third party conducting the reclamation. Financial guarantees through an accepted surety bond program have been posted to provide assurance that the reclamation will be conducted regardless of the financial ability of EMLLC to conduct the reclamation.
20.1.3 Acid Rock Drainage Modeling
The volumes of PAG and non-PAG waste rock were estimated by SRK during development of the Waste Rock baseline report for the EIS. In 2013, IMC input sulfur data in the block model to develop a sulfur model that was used to verify the volumes estimated by SRK.
Acid rock drainage issues were addressed by the EMLLC contractor SRK. A Waste Rock Management Plan (WRMP) was developed that documents the procedures for classifying and managing waste rock associated with the Mount Hope Project for surface storage. Specifically, this plan includes:
Classification of waste rock according to geochemical testing; Characterization of nature and volume of waste rock to be produced according to the current long range mine plan; Operational criteria for waste rock management; Waste rock deposition procedures to minimize potential oxidation and solute generation; and Reclamation and closure activities planned for the waste rock dumps.
This plan incorporates acid-base accounting, solute generation information, and general waste rock volumes and types, to optimize waste rock dumps and minimize the potential for constituent release. This will support final closure.
The WRMP will be managed as a living document and will be periodically modified to integrate data from ongoing geochemical studies into the mine model and optimize waste rock
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management at the mine planning stage and to reflect changes in the mine. The specific procedures or requirements may change with the collection of additional data planned for the pre-construction, construction and operational periods. The WRMP will be periodically reviewed in context with optimization plans developed by EMLLC. If at that time, additional data are available and changes to the waste rock management procedures are deemed necessary, the WRMP will be revised and re-submitted to the NDEP and the BLM for review. The WRMP has also been incorporated into the site Monitoring Plan required under NAC 445A.
Based on geochemical analyses, PAG will account for approximately 26% of the waste rock. Approximately 74% of the waste rock is predicted to be NAG. EMLLC will use an on-site laboratory to determine sulfur content of waste rock from blast hole cuttings and segregate PAG and non-PAG waste rock on the basis of those analyses.
20.2 PERMITS
The Mount Hope Project is currently controlled by EMLLC through unpatented lode mining claims that are located on public lands administered by the BLM and patented claims controlled by EMLLC. The proposed Mount Hope Project falls under federal, state, and local agency purviews with respect to environmental permits and approvals. As noted in Section 4, the permits required for construction of the Mount Hope Project, and some of the permits required for operation, have been obtained. Table 4-4 in Section 4 lists the permits and approvals that have been received.
For the remaining permits, application procedures and timelines are well defined and understood. It is anticipated that these permits will be received well in advance of project startup. Applications primarily consist of descriptions of the specific facilities and the pollution control equipment or management practices that correspond to the applicable permit. The remaining permits remaining to be obtained are all issued by Nevada state agencies. These permits are:
Potable water permit, issued by Nevada Safe Bureau of Safe Drinking Water Septic permits, issued by Nevada Division of Environmental Protection – Bureau of Water Pollution Control Hazardous Materials license, issued by Nevada State Fire Marshall Radioactive Materials license, issued by Nevada Bureau of Radiation Safety Liquefied Petroleum Gas license, issued by Nevada Board of Regulation of Liquefied Petroleum Gas Industrial Artificial Pond permit, issued by Nevada Department of Wildlife
All of these permits to be obtained are anticipated to be issued in time to support operations.
20.2.1 Plan of Operations Approval
As discussed in Sections 4 and 20.1, the BLM issued a ROD in November, 2012, authorizing construction and operation of the Mount Hope Project. EMLLC is required to construct and
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operate the Mount Hope Project in accordance with the approved plan. Additionally, the approval requires that EMLLC implement mitigation plans as discussed in Section 20.1. The ROD also requires EMLLC to post a reclamation bond, as discussed in Section 20.2.4. Finally, EMLLC has established a long-term funding mechanism (LTFM) as financial assurance for completion of post-reclamation monitoring and site maintenance.
20.2.2 Air Quality Permit
The Air Quality Permit program is administered by the Nevada Division of Environmental Protection (NDEP) - Bureau of Air Pollution Control (BAPC). EMLLC was issued a Class II permit based on the emissions inventory for the project, which indicated that criteria pollutants (particulate matter, oxides of nitrogen, oxides of sulfur, volatile organic compounds, lead, and ozone) will all be less than the Class I permit threshold of 100 tons per year. The permit must be renewed on a 5-year basis, but renewals are administrative and not subject to further review of project design.
A dispersion model was used to predict the concentration of emitted pollutants at the project boundary, and predicted that the concentration of pollutants would be below the applicable National Ambient Air Quality Standard (NAAQS). Permit conditions require that EMLLC conduct source testing to demonstrate that actual emissions are at or below the inventory amounts. In addition, EMLLC is required to equip the roaster with a continuous emissions monitoring system (CEMS) that will monitor real-time emission rates of criteria pollutants from the roaster discharge stack.
20.2.3 Water Pollution Control Permit
The Water Pollution Control Permit (WPCP) program is administered by the Nevada Division of Environmental Protection - Bureau of Mining Regulations and Reclamation (BMRR). The permit must be renewed on a 5-year basis, but renewals are administrative and not subject to further review of project design. Permit compliance requires installation of monitor wells, in addition to those already installed, at specific locations around the process facilities, the PAG waste rock disposal facility and TSF. EMLLC is required to monitor and report water quality from these wells on a quarterly basis. EMLLC is also required to collect samples of waste rock and tailing on a regular basis, to represent the materials that are disposed, submit these samples to a third-party lab for analysis and report the results in the quarterly reports.
20.2.4 Reclamation Permit
The Reclamation Permit program is administered by the BMRR. However, the BLM also reviewed the permit application as part of the POO approval, and has concurred with BMRR’s issuance of the permit and acceptance of the reclamation cost estimate (RCE). The permit must be renewed on a 5-year basis, but renewals are administrative and not subject to further review of project design.
EMLLC is required to reclaim disturbance in accordance with the reclamation plan that was submitted as part of the permit application. EMLLC is also required to maintain a bond to
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provide financial assurance in the event that EMLLC does not successfully complete reclamation. The amount of the bond is based on the RCE, which was developed using agency accepted calculation methods and unit costs. EMLLC is required to update the RCE and adjust the bond accordingly every three years and when changes to the permit (reclamation methods or disturbance amounts) are proposed. To reduce costs, EMLLC has used a phased bonding approach, wherein the bond is based on reclamation of a portion of the project, that portion being based on the initial 3 years of disturbance. As disturbance increases, the phased amount would also increase, and allowable disturbance for each time period is restricted to that amount covered by the phased bond.
Reclamation at the site will consist of common practices that are well known and have been demonstrated to be successful in Nevada. Reclamation for most surface disturbance will consist of re-contouring, placing a layer of growth media as cover, and seeding to establish vegetation. In addition, process fluids from the tailing facility will be managed to prevent release to the environment. Consistent with accepted and proven practice in the arid Nevada climate, solution inventories will be decreased by using forced evaporation.
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21 CAPITAL AND OPERATING COSTS
21.1 OPERATING COSTS
The average annual operating cost for the first five complete operating years is $10.35 per ton of processed ore or $6.28 per pound of saleable molybdenum. Table 21-1 summarizes the direct operating cost estimate. All costs are estimated in 2013 Q4 U.S. dollars.
Table 21-1: Summary of Operating Cost First 5 First 10 Complete Complete Production Units Years Years LOM Ore Milled M st 122 244 993 Average Mill Grade %Mo 0.092% 0.086% 0.069% Average Mill Recovery % 89.8% 89.5% 88.8% Leach and Roaster Recovery % 99.2% 99.2% 99.2% Salable Molybdenum 100% M lb/y 40.1 37.2 28.9 Salable Molybdenum GMI M lb/y 32.1 29.8 23.1 Operating Cost Mining $/st mtrl 1.06 1.09 1.44
Mining $/st ore 4.25 4.50 3.91 Milling $/st ore 4.59 4.59 4.60 Roasting $/st ore 0.57 0.53 0.42 Laboratory $/st ore 0.07 0.07 0.07 Mine G&A $/st ore 0.72 0.71 0.64 Shipping $/st ore 0.15 0.08 0.02 Total $/st ore 10.35 10.48 9.65
Operating $/lbMo 6.28 6.86 7.90 Royalties $/lbMo 0.72 0.76 0.80 Total $/lbMo 7.00 7.62 8.70 Note: Data as used in the economic analysis
21.1.1 Mining Cost
Mine operating costs were developed based on first principals for the mine plan and detailed equipment list that was summarized earlier in Section 16. Mine costs were developed by the staff at EMLLC and reviewed by IMC, Inc. John Marek of IMC is the Qualified Person for this sub-section.
Cost estimates are based on vendor quotes and labor rates are commensurate with other projects in Nevada. The base case mine operating costs utilized the following input items:
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Diesel $3.00 /gallon Gasoline $3.24 /gallon Electricity $71 /MWh
Table 21-2 summarizes the total mine operating cost per year along with the total mine capital cost.
The mine operating costs include:
1. Drilling, blasting, loading, and hauling of material from the mine to the crusher, low- grade stockpile or waste storage facilities. Maintenance of the waste storage areas and stockpiles is included in the mining costs. Maintenance of mine mobile equipment is included in the operating costs. 2. Mine supervision, mine engineering, geology, and ore control are included. 3. Operating labor and maintenance labor for the mine mobile equipment are included. 4. Mine access road construction and maintenance is included. If mine haul trucks drive on the road, its cost and maintenance is included in the mine operating costs. 5. Pioneering and the first stage of pre-stripping is planned to be completed by a contractor. The contactor cost for Ames Construction, Inc. is shown as part of the preproduction cost. 6. Re-mining the low grade stockpiles in years 34 through 41 is included. 7. A general allowance called “other” is included that is intended to cover mine pumping costs and general operating supplies that are not assigned to one of the unit operations.
The mine operating costs exclude:
1. Crushing, conveying or processing 2. Reclamation or recontouring.
The mine is planned to work two 12-hour shifts per day for 365 days per year.
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Table 21-2: Mine Capital and Operating Costs Total Required Quantities Opex by Category, $ x 1000 Pre-Strip Mine Opex Mine Project Year Material Elect Diesel Gas Labor Tires Repairs Other Explos Elect Diesel Gasoline Contract Total Cst/Tton Capital Ktons MWh kgal kgal $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $/ton $000s
Preprod 2014-2015 70,078 18,436 5,644 44 22,437 3,339 14,670 1,137 5,473 1,309 16,933 142 32,989 98,428 $1.40 148,918 1 2016 97,212 23,179 8,487 40 28,294 5,302 22,070 1,175 9,350 1,646 25,461 130 0 93,427 $0.96 24,166 2 2017 97,207 23,466 8,793 40 28,643 5,365 31,399 2,469 9,349 1,666 26,379 130 0 105,401 $1.08 4,410 3 2018 97,207 23,258 9,200 40 30,129 5,639 32,158 1,237 9,349 1,651 27,600 130 0 107,893 $1.11 3,189 4 2019 97,207 23,342 7,994 40 28,412 4,961 30,587 1,227 9,349 1,657 23,983 130 0 100,307 $1.03 1,044 5 2020 97,207 23,342 8,738 40 29,584 5,424 31,657 1,234 9,349 1,657 26,213 130 0 105,249 $1.08 2,400 6 2021 97,207 23,342 9,484 40 30,570 5,870 32,689 2,489 9,349 1,657 28,451 130 0 111,204 $1.14 4,067 7 2022 97,207 23,342 11,608 40 32,639 7,005 35,318 1,249 9,349 1,657 34,823 130 0 122,170 $1.26 10,799 8 2023 97,207 23,342 6,966 40 26,882 4,266 28,982 1,219 9,349 1,657 20,898 130 0 93,383 $0.96 17,016 9 2024 112,564 23,482 10,342 40 31,160 6,234 34,981 1,242 10,826 1,667 31,027 130 0 117,267 $1.04 12,115 10 2025 112,564 23,482 12,710 40 34,215 7,662 38,283 1,257 10,826 1,667 38,131 130 0 132,171 $1.17 6,465 11 2026 112,564 23,482 11,397 40 32,684 6,849 36,405 1,249 10,826 1,667 34,191 130 0 124,002 $1.10 33,170 12 2027 112,564 23,482 15,167 40 38,442 9,587 42,610 1,279 10,826 1,667 45,501 130 0 150,042 $1.33 4,834 13 2028 112,564 23,482 17,725 40 41,689 11,038 45,968 1,297 10,826 1,667 53,175 130 0 165,792 $1.47 52,232 14 2029 112,564 23,375 13,322 40 35,387 8,236 39,573 1,264 10,826 1,660 39,965 130 0 137,041 $1.22 4,314 15 2030 89,529 23,462 9,684 40 29,539 5,724 31,451 1,234 8,611 1,666 29,053 130 0 107,407 $1.20 6,710 16 2031 89,529 23,420 10,524 40 30,525 6,179 32,387 1,239 8,611 1,663 31,573 130 0 112,306 $1.25 8,128 17 2032 89,529 23,420 12,513 40 33,139 7,353 35,103 1,252 8,611 1,663 37,540 130 0 124,790 $1.39 1,627 18 2033 89,529 23,420 14,446 40 35,296 8,464 37,673 1,264 8,611 1,663 43,338 130 0 136,440 $1.52 63,671 19 2034 89,529 23,420 13,939 40 34,477 8,164 36,978 1,257 8,611 1,663 41,818 130 0 133,097 $1.49 46,212 20 2035 89,529 23,420 14,613 40 35,841 8,555 37,883 1,267 8,611 1,663 43,840 130 0 137,790 $1.54 16,285 21 2036 89,529 23,420 15,925 40 36,662 9,325 39,665 1,272 8,611 1,663 47,776 130 0 145,102 $1.62 4,518 22 2037 89,529 23,420 18,220 40 35,016 10,708 42,708 1,267 8,611 1,663 54,660 130 0 154,763 $1.73 22,641 23 2038 65,103 23,391 13,910 40 32,702 8,239 33,002 1,254 6,262 1,661 41,731 130 0 124,980 $1.92 2,862 24 2039 62,297 22,299 13,394 40 31,717 7,914 31,724 1,249 5,992 1,583 40,183 130 0 120,491 $1.93 4,895 25 2040 59,247 21,833 14,019 40 32,702 8,254 32,106 1,254 5,698 1,550 42,056 130 0 123,750 $2.09 8,136 26 2041 35,216 18,163 8,171 40 23,138 4,689 20,932 1,207 3,387 1,290 24,514 130 0 79,286 $2.25 820 27 2042 27,909 17,283 6,359 40 20,881 3,587 17,410 1,197 2,684 1,227 19,076 130 0 66,192 $2.37 5,438 28 2043 28,793 17,426 6,937 40 20,932 3,928 18,326 1,197 2,769 1,237 20,810 130 0 69,329 $2.41 11,291 29 2044 28,411 17,364 6,977 40 20,932 3,947 18,316 1,197 2,733 1,233 20,931 130 0 69,417 $2.44 6,195 30 2045 27,841 17,272 7,031 40 20,932 3,973 18,296 1,197 2,678 1,226 21,094 130 0 69,526 $2.50 3,090 31 2046 27,624 17,237 7,198 40 21,752 4,068 18,485 1,204 2,657 1,224 21,594 130 0 71,114 $2.57 3,740 32 2047 29,799 17,588 8,252 40 22,649 4,693 20,239 1,207 2,866 1,249 24,757 130 0 77,790 $2.61 2,267 33 2048 30,531 17,706 9,081 40 23,547 5,175 21,460 1,112 2,936 1,257 27,244 130 0 82,861 $2.71 5,270 34 2049 29,341 17,420 7,382 26 17,465 4,395 16,925 406 2,140 1,237 22,147 85 0 64,800 $2.21 1,879 35 2050 24,341 16,614 1,572 26 9,449 1,209 6,723 364 0 1,180 4,717 85 0 23,727 $0.97 418 36 2051 24,341 16,614 1,284 26 8,804 1,003 6,042 361 0 1,180 3,852 85 0 21,327 $0.88 289 37 2052 24,341 16,614 1,385 26 8,804 1,060 6,173 361 0 1,180 4,155 85 0 21,818 $0.90 202 38 ** 2053 24,341 16,614 1,079 26 8,804 840 5,665 361 0 1,180 3,237 85 0 20,171 $0.83 196 39 2054 24,341 16,614 1,157 26 8,804 885 5,768 361 0 1,180 3,472 85 0 20,555 $0.84 0 40 2055 24,341 16,614 1,471 26 9,349 1,109 6,286 364 0 1,180 4,412 85 0 22,785 $0.94 0 41 2056 11,946 15,034 1,262 26 8,804 802 5,033 361 0 1,067 3,785 85 0 19,938 $1.67 0
Totals 2,849,459 872,935 385,366 1,574 1,093,830 231,021 1,100,108 47,296 256,912 61,978 1,156,097 5,100 32,989 3,985,332 $1.40 555,917
** Re-mining of Low Grade Stockpile in Years 34 - 41 Diesel at $3.00 /gal Elect at $71 /MWh Gasoline at $3.24 /gal
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21.1.2 Plant Processing Cost
EMLLC developed the processing plant costs. M3 reviewed them.
Mill process operating cost averages $4.60 per ton of mill ore. This includes crushing, conveying, grinding, classification, flotation, regrinding, dewatering, leaching, tailing disposal, and ancillary services. Costs include labor, energy, reagents, maintenance, and other supplies. The mill cost excludes roasting. Roasting costs are reported separately.
The operating cost for the roaster facility average $0.34 per pound of saleable molybdenum.
21.1.3 Tailing Operating Costs
AMEC developed the operating cost estimate for tailing deposition. The estimate includes cycloning and material movement for the centerline construction.
21.1.4 Energy Costs
EMLLC provided unit energy costs of $71 per MWh. This is based on discussions with utility companies and transmission providers.
21.1.5 General and Administrative Costs
EMLLC developed the mine site G&A costs estimates.
The average operating cost for mine site G&A is $0.72 per ton of ore over the first five complete years of operation. The estimate includes safety, environmental, accounting, human resources, security, permitting, and the general manager’s office.
21.1.6 Shipping Cost
The operating cost estimate includes only shipping cost for contracted production, where the contract includes shipping cost in the agreement. EMLLC believes the company can sell all uncommitted production FCA Mount Hope.
21.2 BASIS OF CAPITAL COST ESTIMATE
At the time of this estimate, total engineering was 65% complete. Documents available to the estimators included the following:
1. Process Design Criteria Yes 2. Discipline Design Criteria Yes 3. Equipment List Yes 4. Equipment Specifications Yes 5. Construction Specifications Partial 6. Flowsheets Yes 7. P&IDs Yes
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8. General Arrangements Yes 9. Architectural Drawings Partial 10. Civil Drawings Yes 11. Concrete Drawings Partial 12. Structural Steel Drawings Partial 13. Mechanical Drawings Partial 14. Electrical Single Lines Yes 15. Electrical Physicals No 16. Instrumentation Schematics No 17. Instrument List Yes 18. Pipeline Schedule Partial 19. Valve List No 20. Cable and Conduit Schedule No
M3 prepared a detailed estimate during 2012, denominated in 2012 Q2 constant dollars. M3 escalated the 2012 estimate to 2013 Q3 using the Engineering News Record (ENR) Construction Cost Index (CCI).
In addition to the initial capital, the project will require $786 million in sustaining capital.
EMLLC estimated owner’s costs and mine pre-stripping costs.
The capital cost estimate is based on 2013 Q3 U.S. Dollars and is considered to be at a ±10% level of accuracy. Actual project costs could range from 10% above the estimate amount to 10% below the estimate amount. The estimate accuracy is a separate issue from contingency, which accounts for costs that are expected to be incurred, but which cannot be specifically quantified with the level of information available.
Labor rates are based on the prevailing shop wages from Davis-Bacon as of 2012 Q2. Craft labor has been estimated in Table 21-3 at the following rates:
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Table 21-3: Craft Labor Costs Total Direct Hourly Costs Rate Bricklayer $32.68 $77.28 Carpenter $31.54 $79.34 Cement Mason $25.80 $55.17 Electrician $36.15 $90.09 Ironworker $33.00 $112.84 Laborer $22.40 $56.97 Millwright $29.33 $73.24 Operator $32.55 $88.36 Painter $23.44 $58.52 Plumber $34.60 $81.32 Plasterer $30.11 $72.47 Sheet Metal Worker $31.24 $86.35 Teamster $25.83 $69.55
In addition to the hourly rates, a per diem of $70/day for field labor was added to the estimate.
The estimated expenditures by year are as follows:
Table 21-4: Estimated Budget, $ Millions 2007-2012 2013 2014 2015 2016 Total 185 30 167 522 342 1,246
21.3 CAPITAL COST ESTIMATE
The installed capital is estimated to total $1,246 million priced in 2013 Q3 dollars, which have been escalated from the 2012 Q2 estimate. The project will require about 2.0 million direct field construction labor hours. Table 21-5 summarizes the capital in the current project budget. The budget was developed in late 2012 based on the 2012 Q2 capital cost estimate at the restart of engineering for the project.
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Table 21-5: Summary of Capital Cost General Site $8,887,420 Mine $168,085,491 Primary Crushing and Storage $24,877,841 Overland Conveyor $10,639,947 SAG Feed Conveyor $15,991,067 Grinding & Classification $135,402,445 Flotation & Regrind $45,456,075 Concentrate Thickening, Filtration, Leaching $19,448,069 Roaster $37,325,953 Roaster Scrubber $14,299,940 Tailing Disposal $86,605,532 Water Systems $61,800,974 Main Power Substation $19,951,025 Machacek Power Substation and Power Line $18,633,860 Reagents $9,720,768 Ancillary Facilities $41,713,205 Housing & Camp $18,193,000 Subtotal Direct Cost $737,032,613
Total Direct Field Cost without Mine $568,947,122 Total Indirect Field Cost $11,312,712 Per Diem $13,740,687 Tax $36,399,322 Freight $31,401,206 Total Constructed Cost $661,801,050
EPCM $70,217,957 Mine $168,085,490 Commissioning and Spare Parts $6,625,000 Contingency $59,003,166 Owner's Cost $147,848,627 Suspension Related Costs $10,875,603 Total Contracted and Owner's Cost $1,124,456,893 Escalation $22,588,941 Total Evaluated Project Cost $1,147,045,834 Mining Pre-stripping $98,687,000 Total Project $1,245,732,834
21.4 MINE CAPITAL COSTS
Mine capital costs for mobile equipment were developed by EMLLC operations staff and reviewed by IMC, Inc. John Marek of IMC is the Qualified Person for this sub-section.
The mine equipment requirements were developed by EMLLC and reviewed by IMC. Unit costs for the major equipment and most of the minor equipment were based on recent vendor quotes and/or negotiated delivered prices.
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Mine capital costs include:
1. All mine mobile equipment required to drill, blast, load, and haul the material from the pit to the appropriate destinations. 2. Auxiliary equipment to maintain the mine and material storage areas in good working order as well as construct the mine haul roads and maintain them. 3. Equipment to maintain the mine fleet such as tire handlers and forklifts. 4. Light vehicles for mine operations and staff personnel. 5. An allowance is included for initial shop tools. 6. An allowance is included for initial spare parts inventory. 7. Mine engineering equipment (computers, survey equipment etc.) is included. 8. Mine communication network & system. 9. Equipment replacements are included as required based on the useful life of the equipment. 10. Equipment costs include delivery to site and assembly.
Mine capital costs exclude:
1. Mine office buildings, or shop facilities. They are included elsewhere in the project capital list. 2. Mobile equipment that is not required by the mine. (i.e. no mobile units for the plant) 3. Infrastructure or process plant related costs
The equipment is shown as purchased in the year it is required for operation.
The summary of mine equipment costs is presented on Table 21-2.
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22 ECONOMIC ANALYSIS
22.1 BASIS OF FINANCIAL MODEL
The Mount Hope Project economics are based on the discounted cash flow model. Costs are in constant 2013 Q3 U.S. dollars with no provision for future escalation. The economic analysis assumes a 100% project view.
22.1.1 Economic Start Date and Life of the Project
The beginning date for the economic analysis is 2007, and the time zero is June 1, 2014. The economic model uses a calendar model that coincides with the engineering and construction schedule. The model assumes production commences September 1, 2016. The project includes 34 years of mining and 41 years of mill production, with the low-grade ore feeding the process plant for seven years following the exhaustion of the mine.
22.1.2 Exchange Rate
All values are expressed in U.S. dollars, unless otherwise noted. Although the project may be subject to future exchange rate risk, the economic model makes no attempt to account for this risk, primarily due to the uncertainty of forecasting future exposures.
22.1.3 Date of Estimate
Capital estimates have been escalated using the ENR construction estimate to 2013 Q3 dollars from the 2012 Q2 estimate. EMLLC and M3 confirmed with vendors that the equipment cost escalation is less than or equal to the ENR escalation.
22.1.4 Revenue
Annual revenue is the mathematical product of sales price multiplied by the annual product volume. The analysis assumes a flat molybdenum price.
22.1.5 Initial Capital
Total initial capital is $1,246 million. The base case financial indicators assume 100% equity. The model treats expenditures prior to June 1, 2014 as sunk costs. Sunk cost totals $265 million.
22.1.6 Sustaining Capital
The model includes $786 million in sustaining capital over the life of the Project.
22.1.7 Working Capital
The model assumes no accounts receivable, 30 days of accounts payable, and warehouse supplies inventory of $19 million for working capital. The model excludes work in progress (WIP).
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22.1.8 Salvage Value
The model assumes $25 million in salvage value at the end of the mill production.
22.1.9 Operating Cost
The average total cash operating cost over the 41 years life of the mine (LOM) is estimated to be $9.65 per ton of ore processed or $7.90 per pound of molybdenum. The total cash operating cost includes mining, milling, roasting, supporting facilities, and site G&A.
22.1.10 Cost Applicable to Sales
The LOM cost applicable to sales, which includes operating cost plus royalties, is $8.70 per pound of molybdenum.
22.1.11 Royalties
Royalties are owed MHMI and Exxon. Prior to production EMLLC will pay $26.5 million in advance royalty payments to MHMI. This advance payment is reimbursed once the production royalty commences. The production royalty is calculated based on molybdenum net revenue less shipping costs, times a royalty percentage. Table 22-1 summarizes the royalty percentages:
Table 22-1: MHMI and Exxon Combined Royalty Schedule Molybdenum Price Percentage Less than or equal to $12.00 4.5% Greater than $12.00 and less than or equal to $15.00 5.5% Greater than $15.00 6%
Total royalty payments over the life of the mine are expected to total $990 million.
22.1.12 Reclamation
SRK Consulting, Inc. (SRK) provided a Standardized Reclamation Cost Estimate (SRCE) SRK used the Nevada 2007 Standardized Reclamation Cost Estimator Version 1.1.1. The total reclamation cost over the Project life is estimated at $117 million.
22.1.13 Total Production Cost
Total Production Cost is the Total Cash Cost plus the depreciation.
22.1.14 Depreciation
The model calculates depreciation using the appropriate methods according to U.S. Master Depreciation Guide. The following categories assume 150% declining balance switching to straight-line: land improvements 15 years, mine and process equipment 7 years, and electrical distribution equipment 15 years. Buildings are depreciated straight-line over 39 years.
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According to U.S. tax law, 70% of mining development costs (which include pre-production stripping, owner’s cost, and project suspension costs) are expensed in the year they occur, and the remaining 30% is amortized over 5 years.
22.1.15 Project Financing
The economic model assumes the Project will be 100% equity financed.
22.1.16 Nevada Net Proceeds Mineral Tax
The Nevada net proceeds mineral tax uses a rate depending on the ratio of net proceeds to gross proceeds, in lieu of general property taxes on mineral land. Operations with net proceeds (taxable income excluding depletion) exceeding $4 million are taxed at 5%. Net proceeds from Mount Hope are expected to exceed $4 million every year during the mine life. The net proceeds mineral tax is included as a deduction on the Federal income tax. Total net proceeds mineral tax over life of the mine is estimated at $306 million.
22.1.17 Federal Income Tax
Taxable income for income tax is revenue minus operating expenses, royalty, property taxes, net proceeds mineral tax, reclamation, depreciation, and depletion. The income tax rate for federal taxes is 35%. Income tax totals $778 million.
22.1.18 Sales Tax
Sales tax in Eureka County is 6.85%.
22.1.19 Tax Loss Carry Forward
The analysis ignores the tax losses generated by exploration and development activities by EMLLC prior to production development.
22.1.20 Depletion
The evaluation uses percentage depletion. The molybdenum depletion allowance is 22%. It is determined as a percentage of gross income from the property, not to exceed 50% of taxable income before the depletion deduction. The gross income from the property is metal revenues minus royalties, roasting, and TMO freight. Taxable income is defined as gross income minus operating expenses, overhead expenses, depreciation, and state taxes. Percentage depletion exceeds cost depletion every year.
22.2 TOTAL CASH FLOW
The after-tax cash flow totals $4,324 million over the life of the mine.
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22.3 NET PRESENT VALUE, INTERNAL RATE OF RETURN, PAYBACK
The base case economic analysis indicates that the project’s after tax NPV at an 8% discount rate is $953 million, an after tax Internal Rate of Return (IRR) of 19.1% and a payback period of 4.1 years from beginning of production.
22.4 SENSITIVITY ANALYSIS
Table 22-2 and Figure 22-1 show the project sensitivity. The data illustrate that the NPV is strongly sensitive to molybdenum price, ore grade, mill recovery, and operating cost. The Project is less sensitive to capital and sustaining capital.
Table 22-2: NPV Sensitivity Impact Impact Impact Impact from from from from Parameter Parameter Parameter Parameter Parameter Parameter Change of NPV8 Change Change Decrease Increase Decrease Increase $million $million Minus Plus Sustaining Capital -20% 20% 39 -39 4% -4% Capital -10% 10% 80 -81 8% -8% Operating Cost -10% 10% 215 -217 23% -23% Mill Recovery -5% 5% -195 195 -20% 20% Ore Grade -5% 5% -195 195 -20% 20% Molybdenum Price -20% 20% -794 764 -83% 80%
Figure 22-1: NPV Sensitivities
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Figure 22-2 illustrates that increasing the molybdenum price to $20 per pound can double the project NPV.
Figure 22-2: NPV Molybdenum Price Sensitivities
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23 ADJACENT PROPERTIES
Highway 278 is east of the Mount Hope Project. The Nevada Department of Transportation (NDOT) maintains the highway and easements. A new highway turn out will be developed at the entrance to the Mount Hope site with turn lanes in each direction of traffic.
The entire property is surrounded by land maintained by the BLM. The Roberts Creek Ranch is located west of the property and North of the well field.
Other than the historic Mount Hope workings discussed earlier, there are no mining or active exploration projects on adjacent properties. The closest mine operation to Mount Hope is a gold mine located about 18 miles south of the Mount Hope Deposit. A former open pit gold mine is located approximately 12 miles west of Mount Hope in the Roberts Mountains. The workings are visible from Mount Hope as well as Highway 50 and portions of Highway 278 near Mount Hope.
No person contributing to this Report is an owner of property adjacent to the Mount Hope Project.
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24 OTHER RELEVANT DATA AND INFORMATION
Pertinent information about the project not previously discussed is in the section.
24.1 GEOTECHNICAL
To evaluate subsurface conditions at the proposed plant site in 2008, Smith Williams drilled 28 test borings at the proposed location of the Mount Hope process facilities. The depth of the test borings ranged between 35 and 150 ft. Drilling methods utilized included hollow-stem auger and wire-line HQ coring. Two types of drill rigs were used to complete the boring, a truck mounted CME-75 and a track mounted CME-850. In addition to the test borings, 24 test pits were excavated in the area of the proposed process plant structural elements to collect bulk samples of the near surface soils for laboratory testing and to allow visual assessment of the near surface conditions.
In 2013, NewFields drilled an additional 18 boreholes to further investigate the subsurface conditions around the plant site area. Another 205 test pits were excavated to test soil conditions along with finding locations for suitable material for proper drainage layers in the waste rock and tailing storage area.
Considering the subsurface conditions encountered in the test borings and the nature of the proposed construction, it is recommended that all structures with the exception of the crusher, reclaim tunnel, and the mills be placed on spread footings founded on undisturbed natural soils or bedrock. A mat foundation system founded on the bedrock at the site is the best alternative for the crusher and mills. It will also be possible to place the crusher and the mills on a mat foundation system placed on the natural granular soils at the site, although this is not the preferred founding condition. The natural on-site soils, exclusive of topsoil, are suitable to support lightly to moderately loaded slab-on-grade construction. Floor slabs should be separated from all bearing walls and columns with an expansion joint that allows unrestrained vertical movement.
Based on the new geotechnical survey performed in 2013, the recommendation for structural foundations remains the same.
24.1.1 Waste Rock Dump
A preliminary geotechnical investigation for the Mount Hope proposed waste rock dump and potential low permeability soil borrow area was completed in November and December 2005. Considering the subsurface conditions encountered in the test pits and results of the laboratory testing, slope stability analyses for the waste rock dumps were conducted in support of the feasibility level design. These analyses required the selection of strength parameters from the geotechnical work performed to date and from experience on projects similar to the Mount Hope Project. The slope stability analysis examined the stability of the proposed rock dumps under both static and seismic loading conditions. Slope stability analyses of the waste rock dumps were completed through three cross sections developed using the proposed rock dump configurations supplied by Independent Mining Consultants, Inc. (IMC). The analyses indicate
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that the waste rock dumps should demonstrate adequate stability under both static and seismic loading conditions.
24.1.2 Tailing Storage Facilities
A preliminary geotechnical investigation was completed in May 2006 for the proposed South Kobeh Valley tailing storage facility (TSF) site. The investigation included the excavation of test pits within the proposed footprint as well as two test borings along the TSF embankment alignment. The North TSF was not investigated because of the limitation on the amount of disturbance that was allowed under the permit issued for this initial investigation. However, a limited study was performed by Exxon in the early 1980s (Wallace 1982) within the near vicinity of the North TSF. The study provides some indications of the North TSF subsurface conditions.
The 2007 field investigation for the project consisted of fifteen (15) test pits and 11 borings. Large and small-disturbed samples of the subsurface materials from the test pits were collected in 5-gallon buckets and 1-gallon bags, respectively. Samples of the subsurface materials from the geotechnical borings were collected with a 2-inch and a 1⅜-inch inside diameter spoon sampler. The sampler was driven into the various strata with blows from a 140-pound hammer falling 30 inches to measure the relative density or consistency of the soils.
Sage Earth Science (SES) conducted a seismic refraction survey to determine the compressional wave (P-wave) and shear wave (S-wave) velocity in the shallow subsurface, and to assess the potential for geologic structures that could affect the TSF performance. Approximately 17,500 feet of profile were obtained along the proposed South TSF embankment alignment.
24.1.2.1 Static Stability Analyses / Results
Results of the stability analyses are summarized in the table below. For a water impoundment facility, which is the standard to which the embankment is designed, the desired minimum static factor of safety required by the State of Nevada, Division of Water Resources is typically 1.4 for static conditions.
Table 24-1: Results of Slope Stability Analyses Section Type of Static Failure Factor of Safety Modeled
Circular 2.0 Ultimate TSF Block 1.4 Circular 1.7 18-year (mid-life) TSF Block 1.4
As shown in the table above, the proposed facility is stable under static loading conditions since the computed values either meet or exceed the prescriptive factors of safety.
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24.1.2.2 Dynamic Analyses / Results
The dynamic analysis required estimating horizontal peak ground accelerations, response spectral accelerations, and developing acceleration time histories at the TSF site for the 1,100- year operational earthquake and the MCE for closure conditions. Ground motions and synthetic time histories for the 1,100-year probabilistic earthquake were obtained from the USGS Earthquake Hazards Program web site. Ground motions for the MCE were estimated using attenuation relationships recently developed by various investigators as part of the Pacific Earthquake Engineering Research (PEER) Next Generation of Attenuation Project (NGA). All relationships are considered appropriate for extensional normal faulting, which is consistent with the location of the TSF.
The dynamic model results are summarized in the table below:
Table 24-2: Embankment Response Earthquake Deformation (inches)
1,100-year Probabilistic Modal Earthquake (USGS synthetic) <6
MCE (Chi Chi, Taiwan, 1999) <12
Note: Deformation assumes that the settlement is vertical during the earthquake motion and would be of the same order of magnitude as the estimated displacement for the critical slip mass
The estimated TSF deformations summarized above were verified using the computer program Newmark developed by the USGS (Jibson and Jibson, 2003) and agreed well with the estimated SLOPE/W deformations. It should be noted that the Newmark sliding block deformation analysis is a common procedure used to estimate permanent deformation of embankment slopes.
24.2 PROJECT APPROACH
This section describes the execution plan for advancing the Mount Hope Project from the current feasibility study stage to production.
The project plan will utilize the early development of a master project schedule. The project execution plan will ensure that key project processes and procedures are in place that includes:
Develop and communicate a master schedule that is thoroughly planned and accepted by all key stakeholders; Consider all significant project logistics for schedule optimization; Identify and clearly communicate the project organizational chart; Assign and communicate unit responsibilities and accountability for each project member; Adopt a project communication and document control plan; Develop and implement site communications, construction infrastructure, and water supply for an early and efficient startup;
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Construction mobilization; Develop and execute project control processes and procedures; Collaborate early with an experienced builder to work with the design engineering team for constructability reviews; and Implement project accounting and cost control best practices.
Typically, an EPCM or EPC is used for this type of project. The selected project approach will consider:
Market conditions at the time of notice to proceed; Availability of construction and engineering resources; Experience of the qualified firms considered and their typical and proposed approach; An approach that utilizes the best resources available; and Fee-at risk incentives to ensure the quality, cost, safety, and schedule goals of EMLLC.
M3 used an EPCM approach as the basis for the capital cost estimate. This approach provides for a series of lump-sum subcontracts that would include civil, concrete, structural steel, mechanical, piping, electrical, and instrumentation. Design, supply, and erect contracts are anticipated for the access roads, 230 kV transmission line, Highway 278 modifications, and pre- engineered buildings. Invariably the EPCM approach is less expensive than the EPC approach. As engineering will largely be done prior to the onset of construction, this approach is more viable than when engineering schedule is a constraint.
Temporary construction water will be provided by existing wells and a truck loading station currently on site. The general contractor and subcontractors will be responsible for hauling temporary water from this station as necessary. Off-site contracts for the fresh water supply system can precede mobilization at the site and may be available to provide water during construction.
Fire protection and emergency services for the area included in the Eureka housing development are provided by the Eureka County Volunteer Fire Department (VFD) and the Eureka County Ambulance Service. Immediate fire and emergency response at the Mt Hope Project would be provided by internal Emergency Rescue Teams. Onsite staff will include trained Emergency Medical Technicians and Fireman. Site infrastructure will include fire hydrants and fire suppression systems. The Eureka County (VFD), Diamond Valley Fire Department and the Nevada Division of Forestry and the Eureka County Ambulance Service will provide emergency services, as well and will typically be called in an emergency situation.
The Owner will provide security services, source of construction water, telephone lines, and power for the general contractor or subcontractors. The general contractor or subcontractors will provide their own radios. Subcontractors are responsible for their own temporary power.
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24.3 PROJECT SCHEDULE
The execution of this Project is subject to financing. A target date to restart construction is June 1, 2014. Critical paths are driven through project financing and delivery of long-lead equipment such as the roaster, roaster scrubber, rougher flotation cells, and mining shovels. The primary crusher, SAG mill, ball mills and mill motors have been procured by EMLLC.
The ROD from the BLM was received in 2012 Q4. The Project major milestones include:
Receive Project Financing 2014 Q2 Restart Well Field Construction 2014 Q2 Start Major Construction 2014 Q3 Start Pre-Strip 2014 Q4 Startup Plant 2016 Q3
Major assumptions include:
1. Sufficient financing will be in place by 2014 to procure long-lead items and support the schedule. 2. Engineering will resume 2014 Q2. 3. Contractor mobilization will occur with a sufficient portion of the financing received. 4. The pre-production stripping will commence 23 months prior to the plant start-up. 5. The 24-month construction schedule (after fresh water is available) requires that a general construction contractor provide sufficient skilled labor on site to meet this schedule and the labor market is not overly stressed to provide this labor. 6. Temporary power generation will be used for the pre-production mining period. 7. Sufficient fresh water will be developed locally for construction or will be transported to the site for construction and dust control.
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25 INTERPRETATION AND CONCLUSIONS
25.1 GENERAL
The local region has a rich mining heritage, which supports the mining industry. The climate is moderate and local infrastructure is present. A state highway runs adjacent to the site, eliminating many logistical problems typically associated with mining projects. The permitting process is mostly completed.
25.2 GEOLOGICAL DATA SUBSTANTIATION
IMC developed a block model of the mineralization as input to the development of a mine plan. The mine plan was based on measured and indicated category mineralization only. A substantial effort went into the development of an economically optimized mine plan. The resulting total of all mineralization planned for processing constitutes the reserve at Mount Hope. Much of the exploration work for this Project was performed by Exxon during an earlier feasibility study. EMLLC and IMC have reviewed their data, verified core logs, conducted assay verification, re- logged existing core, and drilled additional holes to confirm the mineralization.
25.3 FLOW SHEETS
The mining and process methods are typical and do not require any specialized technology. Proven technologies were selected for the process facilities. Large grinding and flotation circuits are being constructed all over the world. Several molybdenum roasters are in operation around the world.
25.4 ECONOMICS
The economics are favorable, provided prices continue to rise and within the sensitivity limits as evaluated by M3. The ultimate degree of success will be linked to molybdenum prices. For this study, M3 considered a wide range of prices in the sensitivity analysis as seen in Section 22.4. Economic analysis indicates a favorable IRR and NPV.
25.5 METALLURGICAL TESTING
M3 completed a third party review of all metallurgical test work and process design.
25.6 OPPORTUNITIES
25.6.1 Potentially Higher Recoveries
By-pass of the final cleaner flotation may result in higher molybdenum recovery without appreciably reducing concentrate grade. The higher metal sulfide impurities that would result would be eliminated in the ferric chloride leach step and the concentrate grade would be raised to above the acceptable level.
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25.6.2 Toll Roasting
Toll roasting income is not included in base case. However, toll roasting presents an additional upside to the Project’s returns.
25.6.3 Additions to Ore Reserves
Additional in-fill and step-out drilling may provide the potential to expand reserves both in additional ore tonnage and increased ore grade.
25.6.4 Optimized Mine Plan
On-going mine planning may further optimize the mine plan to enhance the sequencing of ore production.
25.7 CHALLENGES OR RISKS
The significant risks that could materially and adversely affect the Mount Hope Project development are discussed below. The risks and uncertainties described below and other risks discussed throughout the Report, however, are not the only risks the Project could encounter. Additional risks and uncertainties not presently known to the authors of this Report may also affect the Project.
25.7.1 Commodity Price
At commencement of production, financial performance could be materially affected by fluctuations in the market price of molybdenum. The market price of molybdenum can fluctuate widely due to a number of factors. These factors include fluctuations with respect to the rate of inflation, the exchange rates of the U.S. dollar and other currencies, interest rates, global or regional political and economic conditions, banking environment, global and regional supply and demand, production costs, and investor sentiment.
25.7.2 Finance
Securing Project financing to complete the engineering, procurement and construction is essential to further development.
25.7.3 Legal
The judicial outcomes of appeals to water permits and the ROD could impact the construction schedule and capital costs.
25.7.4 Costs
Escalation of specific mine related equipment and construction materials would have adverse effects on the estimated capital and operating costs.
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25.7.5 Construction Schedule
Various Project activities, if not completed in a timely manner could adversely affect the construction schedule. Financing is the most critical factor. Other factors include timely procurement, the availability of contractor labor and engineering resources, and maintaining Project permits.
25.7.6 Mine Geotechnical
As with any open pit mine of this size, there is a potential for geotechnical issues, the most notable being a mine slope failure.
25.7.7 Key Personnel
The availability of skilled labor could affect the Project schedule. The loss of key personnel could adversely affect the efficient and effective development of the Project.
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26 RECOMMENDATIONS
EMLLC has received the ROD and other major permits for the construction and operation of the Mount Hope Project.
The engineering for the Mount Hope Project is 65% complete with civil and initial concrete areas ready for construction.
Construction on the fresh water system to provide water during the main construction has been partially completed. Procurement of major items including the primary crusher, SAG mill, ball mills, and power transformers is complete and those items are ready to ship to site.
Based on the current status of the Project and the favorable economics, it is recommended to re- start engineering, procurement, and construction after the Project financing is in an advanced stage of completion.
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27 REFERENCES
Documents referenced in this Report include the following:
“Mount Hope Project, Molybdenum Mine and Process Plant, Feasibility Study, NI 43-101 Technical Report,” 25 April 2008. M3 Engineering & Technology Corporation.
“Mineralogical Study,” 1981, Hazen Research, Inc., Golden, Colorado.
“Crushing, Grinding, Concentrating,” 1983, Hazen Research, Inc. Golden, Colorado.
“Ore Grindability Characterization and Feasibility Grinding Circuit Design for the Mount Hope Project Prepared for Idaho General Mining Inc. Project 11395-001-Modified Design Report Final,” August 2007, SGS Lakefield Research Limited, Toronto, Ontario, Canada.
“Geostatistical Analysis and Estimation of Grindability Data from the Mount Hope Molybdenum Deposit,” April 30, 2006, Minnovex-Geostat, Canada.
“Exxon Minerals Company Mount Hope Class V-S Concentrator Design Criteria,” June 13, 1983, Exxon Minerals Company, Houston, Texas.
“Phase I – Progress Report Mount Hope Project Samples for Geochemical and Geotechnical Studies Project 6045,” March 15, 2006, Mountain States R&D International, Inc., Vail, Arizona.
“Progress Report Flotation Testing on Mount Hope Ores Closed Cycle Tests With Different Water Samples and Flow Sheets Project 6045, September 12, 2006, Mountain States R&D International, Inc., Vail, Arizona.
“Investigation of Rougher Float Procedure,” letter J. Plaisted MSRDI to J. Moore EMLLC,” June 25, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Characterization and Accountability of Phosphorus in Mount Hope Project,” Letter R. Bhappu MSRDI to J. Moore EMLLC, May 16, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“MoS2 Concentrate Specifications,” letter R. Bhappu MSRDI to J. Moore EMLLC, May 16, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Expected Purity of the Final MoS2 and/or MoO3 Concentrates,” Letter R. Bhappu MSRDI to J. Moore EMLLC, June 25, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Expected Purity of the Final MoS2 and/or MoO3 Concentrates, Letter R. Bhappu MSRDI to J. Moore EMLLC, June 25, 2007, Mountain States R&D International, Inc., Vail, Arizona.
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“Metallurgical Data for 0.1% Mo MC Mount Hope Ore MSRDI Flowsheet, Flow Sheet Drawing, Flotation Results Test 11, Rougher Flotation Test Log Sheet,” December, 2006, Mountain States R&D International, Inc., Vail, Arizona.
“Metallurgical Data for Effect of Grind Size vs. Mo Recovery and Mo Rougher Flotation Concentrate Grade, Flotation Results Test MC-1, MC-2, MC-3, MC-4,” October 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Test Log Identifying Procedure as the Mountain State Flow Sheet,” letter Zip and John MSRDI to J. Moore EMLLC, December 22, 2006, Mountain States R&D International, Inc., Vail, Arizona.
“TMQ – Cleaner Reagent,” Letter Donald E. Zipperian MSRDI to J. Moore EMLLC, February 7, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“MSRDI Contributions to Executive Summary Volumes I and II Feasibility Report Idaho General Mines, Inc. – Mount Hope Project 6045,” August 15, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Flotation Results and Flotation Test Log Sheet Test No. 10, 11, 12, 13, and 14,” October 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Flotation Results and Flotation test Log Sheet Test No. 10, 11, 12, 13, and 14,” October 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Rougher Flotation Design Criteria,” facsimile, D. E. Zipperian MSRDI to J. Moore EMLLC, February 22, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Design Criteria,” Letter, J. Plaisted MSRDI to J. Snider M3 Engineering & Technology Corporation, March 9, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Results of Thickener Test on the Mount Hope Tailing,” Letter J. Plaisted MSRDI to J. Snider M3 Engineering & Technology Corporation, October 15, 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Table 3-1 Assay Statistics by Rock Type and Table 3-2 Assay Statistics by Alteration Type,” author and origin unknown.
“Comparative Assays Molybdenum Concentrate Hazen Research and MSRDI”, May 2007, Mountain States R&D International, Inc., Vail, Arizona.
“Analysis of Molybdenum Conc. Residue,” letter J Plaited MSRDI to J. Moore EMLLC, October 10, 2006, Mountain States R&D International, Inc., Vail, Arizona.
“Sedimentation and Rheology Tests on Mount Hope Tailing,” April 2007, Dorr-Oliver Eimco, Salt Lake City, Utah.
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“Roasting and Gas Cleaning,” July 2007, Eric Partelpoeg of EHP Consulting, Inc., Tucson, Arizona.
“Mount Hope Project Plan of Operations and Reclamation Permit Application,” SRK Consulting (U.S.), Inc. June 2006, Revised September 2006.
“Mount Hope Project Class V-S Study,” Exxon Minerals Company, December 1983.
“Mount Hope Phase I Feasibility Study,” EMLLC, June 1, 2005.
Idaho General Mines, Inc. Mount Hope Project Laboratory Bench Scale Tailing Evaluation, Smith Williams Consultants, Inc., September 8, 2006.
“Idaho General Mines, Inc Mount Hope Project Phase IIb Geotechnical Site Investigation for Kobeh Valley Tailing Storage Facility Sites”, Smith Williams Consultants, Inc., September, 8 2006.
“Mount Hope Model Transfer,” Independent Mining Consultants, Inc., March 20, 2007.
“The Molybdenum Market Update December 2013”, CPM Group, December 2013.
“Mount Hope Project Socioeconomic Assessment,” Socioeconomic Effects, Blankenship Consulting, LLC and Sammons/Dutton, LLC, October 25, 2006.
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APPENDIX A – FEASIBILITY STUDY CONTRIBUTORS AND PROFESSIONAL QUALIFICATIONS
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CERTIFICATE OF QUALIFIED PERSON
I, John M. Marek P.E. do hereby certify that: a) I am currently employed as the President and a Senior Mining Engineer by:
Independent Mining Consultants, Inc. 3560 E. Gas Road Tucson, Arizona, USA 85714 b) This certificate is part of the report titled “Mount Hope Project, Form 43-101F1 Technical Report Feasibility Study”, dated 15 January 2014. c) I graduated with the following degrees from the Colorado School of Mines Bachelors of Science, Mineral Engineering – Physics 1974 Masters of Science, Mining Engineering 1976
I am a Registered Professional Mining Engineer in the State of Arizona USA Registration # 12772 I am a Registered Professional Engineer in the State of Colorado USA Registration # 16191
I am a Registered Member of the American Institute of Mining and Metallurgical Engineers, Society of Mining Engineers
I have worked as a mining engineer, geoscientist, and reserve estimation specialist for more than 38 years. I have managed drill programs, overseen sampling programs, and interpreted geologic occurrences in both precious metals and base metals for numerous projects over that time frame. My advanced training at the university included geostatistics and I have built upon that initial training as a resource modeler and reserve estimation specialist in base and precious metals for my entire career. I have acted as the Qualified Person on these topics for numerous Technical Reports.
My work experience includes mine planning, equipment selection, mine cost estimation and mine feasibility studies for base and precious metals projects world wide for over 38 years. d) I visited the Mount Hope property two times during February and August of 2005. e) I am responsible for the following sections or sub-sections of the report titled “Mount Hope Project, Form 43-101F1 Technical Report Feasibility Study”, dated 15 January 2014: 1.11, 1.12, 7, 8, 9, 10, 11, 12, 14, 15, 16, 21.1.1, 21.4, 25.2, 25.6.3, and 25.6.4. f) I am independent of Eureka Moly, LLC, applying the tests in Section 1.5 of National Instrument 43-101.
g) Independent Mining Consultants, Inc. and John Marek has worked on the Mount Hope Project for Eureka Moly, LLC or their predecessors on various projects since 2005. Prior to that time, IMC completed a block model of the Mount Hope deposit for Kennecott Corporation during 1995. h) I have read National Instrument 43-101 and Form 43-101F1, and to my knowledge, the Technical Report has been prepared in compliance with that instrument and form. i) As of the effective date of the Technical Report, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.
Dated: January 15, 2014.
(Signed) “John M. Marek”
John M. Marek Registered Member of the American Institute of Mining and Metallurgical Engineers, Society of Mining Engineers