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Cameroon Cobalt-Nickel-Manganese

Geovic Cameroon (GeoCam) was formed in 1995 to explore a prospective area in Cameroon identified by a UN Development Program.  GeoCam subsequently acquired exclusive rights to develop its cobalt-nickel-manganese deposits through a Mining Convention issued in 2002.  A Mining Permit was decreed in favor of GeoCam in 2003 that covers the entire cobalt mineral province in southeastern Cameroon, perhaps the largest primary cobalt resource in the world.  Geovic Mining Corp. (GMC) owns 60.0% of GeoCam and manages project operations.  The National Investment Corporation of Cameroon, www.sni.cm, controls 39.5% (including 20% directly), and 0.5% is held by GMC President William A. Buckovic.

In January 2008, Geovic filed a Canadian National Instrument 43-101 compliant Technical Report summarizing a feasibility study (FS) on the Nkamouna Project carried out by Washington Group International (WGI). The Nkamouna Project contains proven and probable ore reserves of 54.7 million tonnes grading 0.25% cobalt, 0.69% nickel, and 1.33% manganese, measured and indicated resources of 61.3 million tonnes grading 0.24% cobalt, 0.66% nickel, and 1.26% manganese, and inferred resources of 17.4 million tonnes grading 0.18% cobalt, 0.55% nickel, and 1.06% manganese.  

The FS processing rate of 2,000 tonnes per day (tpd) represents a 33% increase from the earlier prefeasibility study (PFS) processing rate of 1,500 tpd.  Per the FS, GeoCam plans to produce approximately 4,100 tonnes per year (tpy) cobalt and 3,200 tpy nickel from 656,000 tpy of physically upgraded concentrates for an initial period of 19 years.  High-grade cobalt and nickel oxides will be produced mainly to supply the fast-growing demand for hybrid electric vehicle batteries. Nkamouna represents the first of seven such properties to be developed.

In early 2008, a Feasibility Optimization Study (FOS) was commissioned to reduce project capital and operating costs.  The FOS is scheduled for completion in mid-2008, and will include additional circuits for the production of manganese and scandium.  Major Project construction is scheduled to start in November 2008, while in the meantime GeoCam is expanding infrastructure and making preparations for such activities.

The Nkamouna mine reserve has been well defined by over 1,300 test pits and drill holes.  Extensive physical upgrading, leach and solvent extraction tests, process flowsheets with equipment specifications, and estimated capital and operating costs for the process plant were completed and incorporated into the Feasibility Study.  

Mining will be relatively inexpensive as the deposits average less than 16 meters deep and blasting is not required.  The Nkamouna ore-body is large, predictable, and open for further expansion.  Since these specific ores are amenable to simple pre-concentration and leaching at atmospheric pressure with a low acid consumption, project capital costs may well be the lowest in the industry and operating costs will be highly competitive with global cobalt producers.

In May 2007, GeoCam received a Certificate of Compliance for the environmental and social assessment.  Moreover, a water permit was received in January 2008.  Upon receiving a land lease that compensates the government for disturbed lands (expected before mid-2008), GeoCam will have all permits necessary to construct and operate the Nkamouna Project. 

In March 2008, GeoCam started to expand its field compound to accommodate at least 40 additional personnel.  Subject to government approvals, GeoCam plans to install a small airstrip in the Nkamouna area in the second half of 2008 to allow the aforementioned major construction to begin efficiently in November 2008, and thereby expedite commencement of production in late 2010.

The Nkamouna project development and construction schedule is summarized below.



The Republic of Cameroon has a history of political and economic stability, and continues to pro-actively institute economic reforms and governmental improvements through privatization and diversification.  The Government strongly encourages foreign investment, including development of its natural resources, and has designated GeoCam as a Strategic Enterprise thereby qualifying the company for 50% reductions in taxes and various operating incentives.



Nkamouna Project Ecomnomics

Pre-Tax ($ millions)

(1)

(2)

(3)

Cobalt Price ($/lb)

20.08

20.08

35.00

Nickel Price ($/lb)

11.16

11.16

11.16

Cash Flow ($ millions)

2,529

2,405

5,185

NPV @ 10% ($ millions)

796

788

1,822

IRR

39.5%

63.4%

74.3%

 

After-Tax ($ millions)

(1)

(2)

(3)

Cash Flow ($ millions)

1,792

1,721

3,668

NPV @ 10% ($ millions)

555

577

1,295

IRR

33.0%

56.1%

61.4%

Cash Oper. Cost, $/lb Co (4,5)

$3.12

$3.12

$2.87

Payback (years)

2.9

2.0

1.7

 

  1. Base Case: 100% equity, 3-year average metal prices
  2. Leveraged Case: 40% equity, 60% debt, 3-year average metal prices
  3. Higher Price Case: 100% equity, $35/lb cobalt, $11.16/lb nickel
  4. Net of nickel by-product credit, production taxes
  5. Excludes Manganese and Scandium credits