Resource World Magazine

j u n e / j u l y 2 0 1 4 www.resourceworld.com 33 NORthcliFF ResOuRces sets sights on tungsten production by Thomas Schuster Northcliff Resources Ltd. [NCF-TSX] holds a controlling interest in and is the operator of the advanced-stage Sisson tungsten- molybdenum project in New Brunswick and is positioned to become a key Canadian and global producer of tungsten. With a robust feasibility study in hand, the company currently has about $7 million in its coffers and is well financed to take it through to a production decision in early 2015. An Environmental Impact Assessment report (EIA) was completed and submitted in July last year and a final federal and provincial decision is expected by year end. The company hopes to start production in 2017. Early on, Northcliff recognized the importance of engaging with stakeholders and First Nations and has been actively engag- ing them throughout development process. "We have established working groups consisting of First Nations, stakeholders and rep- resentatives from local communities that will continue through all stages of development and closure," said Chris Zahovskis, President and CEO of Northcliff Resources. In October 2013, Northcliff reached an important milestone as New Zealand-based Todd Corporation acquired a 25% effective interest in the Sission Project. Todd is family owned and is one of New Zealand's largest and most successful companies. Todd Group CEO, Jon Young, said, "Todd is pleased to be associated with the Sisson Project which, once developed, will be a signifi- cant new tungsten producer. The investment is consistent with Todd's strategy of partnering with proven operators to develop long-term projects." In consideration for the interest in the Sission Project, Todd acquired 15% of Northcliff stock ($5 million in a private placement at $0.36/share representing a 20% premium to the 30 day volume- weighted average price on the TSX), and 11.5% direct interest in the project for $14 million, payable in stages. Total value of the transac- tion was $19 million. Todd holds an option to acquire an additional 10% interest for $20 million (for a total effective interest of 33.5%). Northcliff is now securing off-take agreements for future tung- sten and moly production. This will ultimately help fund part of the capital costs to build the mine. According to the Samuel Engineering feasibility study, the project has a total expected capital cost of $579 million with an after-tax Net Present Value of $418 million based on an 8% dis- count rate. Highlights of the feasibility study are outlined below: • Life of Mine: 27 years • After-Tax Internal Rate of Return: 16.3% • Payback: 4.5 years • Effective Strip Ratio: 1 to 1; Mill throughput: 30,000 tonnes/day • Average Ammonium Paratungstate (APT) Production per year: 557,000 mtu (10 kg). • Average Molybdenum production/year: 4.1 million lbs • Tungsten Recovery: 77%; Molybdenum Recovery: 82% • Total APT Cash Cost: $8.18/tonne. Results are based on APT price of US $350/mtu; and a molyb- denum price of US $15/lb. The feasibility study established Sission as one of the most sig- nificant tungsten reserves outside of China. Proven and probable reserves tally to 334.4 million tonnes averaging 0.066% tungsten trioxide, and 0.021% molybdenum. This translates into 22.2 mil- lion contained MTU of tungsten trioxide (1 MTU = 10 kg) and 154.8 million lbs molybdenum. With an ammonium paratungstate plant on site, the project will be a low cost producer of APT and competitive with Chinese tung- sten concentrate producers. According to metals consultant Roskill, APT commands a $70/MTU premium over tungsten concentrate. At Sission, total cash cost to produce 1 MTU of APT is esti- mated to be $153.30. Roskill reports that Chinese operating costs to produce tungsten concentrate are estimated to fall in the range of $90 to $110 per MTU (net of by-product credits). The Chinese currently produce 85% of the world's tungsten. As China serves its own growing domestic needs, significant new tungsten capacity will need to come on stream to fill a grow- ing tungsten supply gap. Roskill projects that by 2025 as much as 30,000 tonnes of extra tungsten capacity will be required per year. Tungsten is considered a strategic metal in the US and the European Union and forecast global consumption correlates with GDP growth. Forecast global demand is expected to outstrip global GDP by 1.5% to 2016 and 0.5% thereafter. Tungsten is not traded on a terminal exchange and China is the effective "price setter." For that reason the price is relatively inelastic. The bottom line is that the future looks good for tungsten prices as demand increases and supply tightens. Northcliff's Sisson Project is well positioned to take advantage of this market. The company currently has 91.3 million shares outstanding and market capital- ization of $23 million. n Left to right, Drew Takahashi, Manager, Project Services; Christopher Zahovskis, President & CEO, Northcliff Resources; and John Boyle, Vice President, Environment & Sustainability, explore the Sisson tungsten-molybdenum project in central New Brunswick. Photo courtesy Northcliff Resources Ltd. MINING

• Cover