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NGEx Resources Inc.
The NGEx District

South America's Biggest New Copper-Gold Camp

Projects

Projects

Project Constellation

NGEX Resources' primary project is Project Constellation, a combination of the Los Helados and the Josemaria projects, which are advanced exploration stage copper-gold projects.

The Corporation has a 60% interest in Josemaria, subject to a Joint Exploration Agreement with Japan Oil, Gas and Metals National Corporation ("JOGMEC") which holds the remaining 40%, and approximately 60% interest in Los Helados subject to the PPC JEA with Pan Pacific Copper Co., Ltd., which holds the remaining approximately 40%. Effective September 1, 2015, the joint exploration partner for the Los Helados project Pan Pacific Copper Co. ("PPC") elected not to fund its pro-rata share of expenditures and as a result elected to dilute its interest pursuant to the PPC JEA. Accordingly, the Corporation has funded 100% of the Los Helados project starting September 1, 2015. As at December 31, 2016, PPC's interest in the Los Helados Project has been diluted to 38.69%. The Corporation acts as the operator of both agreements and, in each case, both parties are required to contribute their pro-rata share of expenditures or dilute their interest in the Projects.

Project Constellation (Los Helados/Josemaria Integrated), Chile and Argentina

Current Technical Report

NGEx Resources Inc. commissioned AMEC International Ingeniería y Construcción Limitada (Amec Foster Wheeler) to compile an independent NI 43-101 technical report on the results of a preliminary economic assessment of an integrated mining operation that incorporated the Josemaría deposit and the Los Helados deposit (collectively termed Project Constellation). The Report also included an updated Mineral Resource estimate for the Josemaría deposit.

Information detailed below of a scientific or technical nature regarding Project Constellation is derived from the National Instrument 43-101 technical report with an effective date of February 12, 2016, an amended signature date of March 31, 2016, and titled "Constellation Project incorporating the Los Helados Deposit, Chile and the Josemaría Deposit, Argentina NI 43-101 Technical Report on Preliminary Economic Assessment ", which was prepared by Alfonso Ovalle, RM CMC; Cristian Quiñones, RM CMC; Cristian Quezada, RM CMC; David Frost, FAusIMM; and Vikram Khera, P.Eng., all of whom are with Amec Foster Wheeler International Ingeniería y Construcción Limitada; and by Gino Zandonai, RM CMC, of DGCS SA (the "Project Constellation PEA"). The Project Constellation PEA is available under the Corporation's profile on SEDAR www.sedar.com. The reader is cautioned that the information below is a summary only, which has been derived, in part, from the Project Constellation PEA and that certain sections have been updated. To put the contents hereof in context, the reader should review the entire Project Constellation PEA, together with its illustrations, figures, footnotes, bibliography, etc. Click here to view Technical Reports.

Summary of Project Constellation Economic Results

Pre-Tax NPV (8%) & IRR $4.43 billion NPV
20.7% IRR
After-Tax NPV (8%) & IRR $2.61 billion NPV
16.6% IRR
Payback Period
(undiscounted, after-tax cash flow)
3.6 Years
Metals Prices Assumed $3.00/lb Cu
$1,275/oz Au
$20.00/oz Ag
Initial Capital Expenditures $3.08 billion
LOM Sustaining Capital Expenditures $4.36 billion
LOM C-1 Cash Costs
(net of by-product credits)
$1.05/lb Cu payable
Nominal Mill Capacity 150,000 t/d
Mine Life 48 years
Average Annual Metal Production (rounded)

Life of Mine

First 5 years

150,000 t Cu
180,000 oz Au
1,180,000 oz Ag

185,000 t Cu
345,000 oz Au
1,310,000 oz Ag

LOM Average Process Recovery 88.3% Cu
72.7% Au
61.4% Ag

Note: All figures reported are in 2015 US dollars and on a 100% Project and 100% equity basis valuation.

Project Constellation is preliminary in nature and includes the use of Inferred Mineral Resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that PEA results will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

Project Constellation contemplates sequential production from an open pit mine at Josemaría followed by a block cave underground mine at Los Helados. The two deposits are located approximately 10 km apart, and material from both deposits will be processed at a centralized facility.

Including pre-stripping, Project Constellation would be in operation for 50 years. The active mine life, excluding pre-stripping is 48 years. Initial development would target the highest-grade portion of the Josemaría deposit, which is a near-surface zone of supergene-enriched mineralization. As the higher-grade material at Josemaría is depleted, production will transition to the high-grade core of the Los Helados deposit. Compared to either deposit when considered as a stand-alone operation, Project Constellation's shared facilities help improve capital efficiency, reduce overall environmental impacts, and dramatically improve project economics.

A central processing facility is planned to be located in Argentina. Material from Josemaría will be transported via a series of three surface conveyors (including two transfer stations) totalling 4.9 km in length, to a stockpile that will be located near the process plant. Material from Los Helados will be transported via an 8.1 km long underground conveyor tunnel and a 2.8 km long surface conveyor, which will tie into the existing Josemaría surface conveyor system at the first transfer station. Concentrate will be transported by truck to a port facility in Caldera, on the Chilean coast.

Groundwater will be supplied from a nearby well field in Argentina through an 8 km pipeline to the plant site, and power will be supplied via 250 km of power line construction to connect to the Argentina national grid.

Processing will be by conventional sulphide flotation, following comminution by a high pressure grinding roll (HPGR) circuit at a rate that varies between 150,000 t/d and 120,000 t/d depending on the hardness characteristics of the material being processed. This is expected to produce a concentrate containing a life-of-mine average of 29.0% Cu, 10.4 g/t Au and 70.3 g/t Ag and deleterious elements, which are expected to be well below penalty levels. Metallurgical recoveries are forecast to average 88.3% Cu, 72.7% Au and 61.4% Ag.

The base case scenario, which combines Josemaría and Los Helados mineralized material, uses an 8% discount rate. The resulting after-tax project NPV (discounted at 8%) is US$2.61 billion and the internal rate of return (IRR) is 16.6%. The cumulative, undiscounted, cash flow value for Project Constellation is projected at US$15.95 billion over the life of the mine. The initial capital investment for the Project is estimated to be $3.08 billion. Average operating costs are estimated at US$9.34/t, with cash costs, net of by-product credits, of US$1.05/lb Cu produced.

Project Constellation is located about 135 km southeast of the city of Copiapó. The Los Helados deposit is centred at 28.3408º S, 69.5857º W in Chile, and the Josemaría deposit is 10 km to the southeast, centred at 28.4359º S, 69.5486º W in Argentina.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Project Constellation is located in the Andes Mountains, straddling the Chile-Argentina border. Elevations range from approximately 3,000 m to 5,300 m at the pass between Josemaría and Los Helados. Topography is quite rugged on the Chilean (western) slope of the mountains, and more subdued on the Argentine (eastern) slope which is typically comprised of broad, flat-bottomed valleys with moderately steep slopes.

The best access to the Project is from Copiapó, a driving distance of about 170 km, or three hours. Alternate access from Argentina is possible by major provincial highways north through San Jose de Jachal to the town of Guandacol (in La Rioja Province) and from there by approximately 150 km of regional unpaved roads and trails. Total driving time from San Juan is approximately 8.5 hours.

The climate in the Project area is dry to arid and the temperatures are moderate to cold. Annual precipitation is about 250 mm, with snow at higher altitudes in the winter. Exploration fieldwork is generally possible from mid-October to early May. It is anticipated that mining operations will be conducted year round.

Project Constellation will be a greenfields development. The most important logistics centre in the region is Copiapó. Copiapó has a population of approximately 150,000 people, an airport with daily scheduled flights to Santiago and Antofagasta, and companies that offer mining and exploration services. While farther away, San Juan, Argentina, is also a major mining centre with good mining services available.

History

There is no record of significant exploration activity at Josemaría or Los Helados prior to NGEx's interest. There are no historical Mineral Resource estimates, and no reported production from the area.

Geological Setting, Mineralization and Deposit Types

Based on geological features and location, the Josemaría and Los Helados deposits are classified as examples of Cu-Au porphyry systems.

The Cu-Au mineralization at Josemaría is mostly hosted by a Miocene porphyry system which forms an elongated body with minimum dimensions of 800 to 900 m north-south, 600 to 700 m east-west and 600 to 700 m vertically.

Mineral zones within the Josemaría deposit were defined by the relative abundance of chalcopyrite, pyrite and chalcocite, as well as the mode of occurrence of chalcocite (hypogene or supergene) and level of oxidation. Chalcopyrite and pyrite are disseminated through the potassic zone, with minor bornite. Quartz-magnetite ± chalcopyrite veining occurs through much of the main mineralized zone, as discrete veins and locally as a more intense stockwork.

The Josemaría deposit remains open to the south, beneath a thickening cover of post-mineral volcanic rocks, and also at depth.

Mineralization at Los Helados is primarily hosted by a Miocene magmatic-hydrothermal breccia that forms a roughly circular, pipe-like body with minimum dimensions of 1,100 m east-west, 1,200 m north-south, and at least 1,500 m vertically. The breccia body is surrounded by a broad halo of moderate to low grade Cu-Au mineralization which diminishes in grade with increasing distance from the breccia contact. The mineralization is dated at 13.13 ± 0.32 Ma. The breccia limits have been established by drilling to the west, east and south; however, the northern limit of the breccia body has not yet been identified. The system also remains open at depth, and the lateral extent of the breccia at depth is poorly constrained by the current drilling.

Four mineral zones are recognized within the deposit based on sulphide occurrence. In order of increasing depth, the zones are: pyrite only, pyrite>chalcopyrite, chalcopyrite>pyrite and chalcopyrite only. This sulphide zoning sequence reflects a progressive downward increase in the amount of chalcopyrite relative to pyrite.

Recent internal NGEx studies have suggested the presence of a discrete, higher-grade breccia phase occurring along the western and southwestern margins of the magmatic-hydrothermal breccia. This high-grade breccia zone has not been fully delineated, and remains open for further extension.

The knowledge of the Josemaría and Los Helados deposit settings, lithologies, mineralization, and alteration controls on copper grade are sufficient to support Mineral Resource estimation and can support preliminary mine planning at the Project Constellation PEA level.

Click here to view the Corporation's Annual Information Form which provides further detail on NGEx Resources and Project Constellation as well as Sampling and Assaying Methods, Qualified Persons, etc.  
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