NI 43-101 Technical Report PEA Record Ridge Project
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Revised NI 43-101 Technical Report Preliminary Economic Assessment Record Ridge Project British Columbia, Canada Report Date: June 3, 2013 Effective Date: April 18, 2013 Report Prepared for West High Yield [W.H.Y.] Resources Ltd. P. O. Box 68121 Calgary, Alberta T3G 3N8 Canada Report Prepared by SRK Consulting (U.S.), Inc. 7175 West Jefferson Avenue, Suite 3000 Lakewood, CO 80235 SRK Project Number: 183200.020 Signed by Qualified Persons: Bart Stryhas, PhD, CPG Bret Swanson, BEng Mining, MAusIMM, MMSAQP Corby Anderson, PhD ,CEng, FIChemE, FIMMM, MMSAQP Arlene Laudrum, PGeo SRK Consulting NI 43-101 Technical Report – Record Ridge Project Page i Summary (Item 1) SRK Consulting (U.S.), Inc. (SRK) has been commissioned by West High Yield [W.H.Y] Resources Ltd. (WHY) to prepare a Canadian National Instrument 43-101 (NI 43-101) compliant Preliminary Economic Assessment (PEA) for the Record Ridge Project (Record Ridge or the Project), Rossland Mining District, British Columbia (B.C.), Canada. The Project is a magnesium exploration project that was mapped, surveyed, and drilled by WHY during 2007, 2008 and 2011. This document provides a PEA of the Project, prepared according to NI-43-101 guidelines. Initially, this preliminary economic assessment was prepared based on metallurgical results provided by Met-Solve Laboratories in their report dated October 31, 2012, which is attached to this document in Appendix B. This report indicated an open cycle laboratory leach testing metallurgical recovery to solution of magnesium from the Record Ridge mineralization of approximately 60%. The Met-Solve report also indicated that these initial leaching recovery rates to solution could likely be improved with additional metallurgical work. Subsequent test-work detailed in Section 11 of this report was conducted after the great majority of the engineering and design work had been conducted in 2012 based on the 60% recovery assumption. Met-Solve Laboratories completed this recommended work and reported on April 18, 2013 with an estimated improvement of the open cycle laboratory leach testing Mg recovery to 80% to solution. This report is attached to this document, in Appendix C. Of course, this is not a clear indication or confirmation of the overall Mg recovery to a final fused magnesia product as this aspect of the process has yet to be tested in any manner. In this preliminary economic assessment, the body of the report has not been altered to reflect the recent improvement in the leached Mg recovery. These improvements and the associated additional operational and capital costs have been incorporated into the technical economic model. The case presented herein is conservative, in that the assumptions used in the initial resource statement and subsequent engineering use the initial 60% metallurgical recovery assumption. The mineral resources have not been restated using a cut-off grade which would be based on a metallurgical recovery of 80% Mg. The effect of the higher Mg recovery is expected to lower the cut-off grade for the stated mineral resources, thereby increasing tonnes and extending the life of the mine. Given that the mine life based on the current stated resource and production scenario is projected at 42 years, any potential changes due to the improved recovery are positive and do not affect the project viability with regards to the preliminary economic assessment. Due to the significant amount of time needed to update the conceptual mine design, tailings storage design, etc., it was deemed that the only material change to be incorporated in this preliminary economic assessment with respect to the updated metallurgical test work would be the adjustment to some design criteria and the technical economic model, the details of which are summarized in Section 19. Property Description and Ownership Record Ridge is an intermediate-advanced stage magnesium exploration project located in southern B.C., Canada. It is located 7.5 km west to southwest of the town of Rossland, B.C., Canada; 5 km north of the U.S.-Canada border; and approximately 400 km east of the Vancouver, B.C. The mineralization is centered about 49°02’33” N. latitude and 117°53’22” W longitude (UTM NAD 83 coordinates 5,432,500 N and 434,500 E). The property is located in the Canadian National MHH/SH Record Ridge_PEA_Report_183200.020_043_MLM.docx June 3, 2013 SRK Consulting NI 43-101 Technical Report – Record Ridge Project Page ii Topographical System Mapsheet 082F. Mineralization is related to the elevated magnesium content in serpentinized mafic rocks. WHY retains 100% of the mineral rights to the property, has agreements with the B.C. government for exploration access, and is in the process of evaluating options for procurement of surface rights for continued development. Ownership The WHY claim block consists of 20 contiguous mineral claims covering 6,515.12 hectares (ha), all under the 100% ownership of WHY (#145867). The known magnesium mineralization of the Project is located within two of the mineral claims. WHY does not currently have surface rights with the exception of access and disturbance agreements with the B.C. government related to magnesium exploration activities. Also considered are the nearby WHY land holdings consisting of eight Crown- granted claims and one private claim with surface and mineral rights (9 titles) totaling 85.93 ha. Geology and Mineralization The Record Ridge area is located within the Quesnel Terrain of the Intermontane Belt. It is comprised of a highly deformed Jurassic (180 Ma) age volcanic island arc-back arc basin complex intruded by Tertiary volcanic and plutonic rocks. The exploration area is underlain primarily by the Record Ridge Ultramafic Body of Paleozoic age. This unit is bound on the north by the volcanics of the Tertiary Marron Formation, on the east and southeast by the volcanic rocks of the Jurassic Elise Formation and on the west and southwest by the Tertiary age Coryell intrusive suite. Regional metamorphism has reached greenschist facies in the Project area. Mineralization containing economically significant concentrations of magnesium is known to occur in the ultramafic rocks which have undergone serpentinization. This rock type makes up the predominant lithology described at the Project, and occurs widespread. Lower concentrations of magnesium within the serpentinite are present in dioritic intrusive rocks and lenses of andesite/diagabbro. Exploration Status During the 2007, 2008 and 2011 field seasons, WHY conducted surface mapping, surface sampling and diamond drilling on the Project. The surface mapping was conducted at a 1:2,500 scale focused on the ultramafic rocks. Samples were collected from outcrop and analyzed by Inductively Coupled Plasma-Atomic Emission Spectrometry (ICP-AES) for 24 elements. A total of 30 samples were collected and analyzed. The results of this work delineated a high magnesium anomaly located in the east flank of the Record Ridge, presumed to lie above the serpentinite unit. The Project resource estimation is based on information from 77 diamond core drillholes totaling 10,310 m, with 5,836 assays. These were carefully logged, sampled and tested with 24-or 32-element ICP-AES analysis. Development and Operations Record Ridge will be mined using conventional open pit methods using a default 365 day production cycle comprising of one 12 hour shift delivering approximately 3,000 tonnes per day (t/d) of material to the crusher. Waste material below the specified cut-off will be hauled from the pit and placed in a designated waste dump location. With further optimization of the tailings dam facility, it is foreseeable that waste will be used as bulk earthworks for the downstream construction of the dam MHH/SH Record Ridge_PEA_Report_183200.020_043_MLM.docx June 3, 2013 SRK Consulting NI 43-101 Technical Report – Record Ridge Project Page iii wall. Material will be mined from the pit and transported to the processing facility near the mine and placed in a stockpile and subsequently fed into the crusher bin by front-end-loader. The mine production schedule and fleet estimation suggest that a 42 year mine life is possible given the economic assumptions for processing, mine cost, recovery and metal price. There is almost no variation in grade across the deposit so detailed grade control and selective mining methods will not be needed to ensure a consistent mill feed grade for the process plant. Table 1: Mine Operating Cost Summary Description Unit Cost (US$/t-moved) Total Cost (US$000’s) Drilling 0.23 17,976 Blasting 0.38 30,743 Loading 0.19 15,517 Hauling 0.78 62,308 Roads & Dumps 0.15 12,257 Labor Inc. G&A 0.53 42,055 Total Operating Costs $2.26 $180,856 Mineral Resource Estimate Dr. Bart Stryhas is the Qualified Person (QP) responsible for the resource estimation methodology and the resource statement. The drillhole database used in the estimation is of high quality and has been independently verified by SRK. The drillholes were capped and composited to 3 m lengths within geologic domains defined during the logging. A three-dimensional geologic model was constructed based on the logged geology in the drilling database. The grade estimation was confined to a hard boundary of the ultramafic (serpentinite) lithic domain, with the estimation using only the composited samples from the same domain. The magnesium grade estimation utilized an Ordinary Kriging (OK) algorithm supported by the 3.0 m bench composites. Search distances were determined from omni-directional variograms calculated using