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Cameroon Cobalt - Nkamouna
Geovic Mining Corp. (Geovic) is focused on developing the world’s largest primary cobalt project through its 60.5% ownership of Geovic Cameroon PLC (Geovic Cameroon). Geovic
Geovic
Key attributes of the Nkamouna-Mada Project include:
- Politically stable country:
- Uncomplicated ownership and mineral title: Geovic
- Large resource base and robust project economics: Geovic
In the Nkamouna and Mada Project area, Geovic has delineated Proven and Probable Reserves totaling 68.1million tonnes as summarized below and highlighted in our most recent N.I. 43-101 compliant Technical Report. The proven and probable reserves identified to date in the Project area covers a fraction of the total mineralized area included in the 1,250 square kilometer Mine Permit area. Geovic Cameroon has identified five other mineralized deposits inside the permit area, for which only limited exploration has been completed, and the Nkamouna-Mada deposits comprise only 22% of the total mineralized area within the mining permit boundary. With a 23 year project life from the existing reserves, we are confident that Geovic Cameroon will produce cobalt, nickel and manganese from this area for generations to come.
Summary of
Reserves and Resources
Please see the “Cautionary Note to U.S. Investors”.
Mining will be carried out with an economical mining fleet using shallow strip mining methods with no blasting in the overburden or ore. Overburden will be removed inexpensively using bulldozers. Mining will be performed with excavators loading articulated trucks that will allow mining flexibility, mobility, and all-weather production. Concurrent reclamation of each mining zone will be carried out to minimize the mining footprint at any given time.
The run-of-mine ore at the Nkamouna Project will be significantly upgraded to a high concentrate using a modest crushing and attritioning (washing) procedure. The ore is then separated from the waste in a hydrosizer that recovers the coarser upgraded ore particles that will then be processed in the hydrometallurgical plant. This simple physical upgrading system removes about 70% of the mined material to a tailings facility as waste material, and sends the remaining 30% to the processing plant. The upgraded material delivered to the plant will contain about three times the cobalt and manganese concentration and slightly enhanced nickel concentration than was contained in the original run-of-mine material. Using this comparatively inexpensive physical upgrading process, before it enters the more expensive hydrometallurgical process, significantly enhances the Project economics.
Since 2009, Geovic has performed a number of bench and pilot-scale laboratory tests aimed at increasing cobalt yields, reducing capital and operating costs, and further reducing process risk. The chemical reactions and reagents that are required to recover the cobalt, nickel and manganese from the ore have been extensively tested. Based on the testing and other project improvements, Geovic Cameroon commissioned an updated Feasibility Study in late 2009.
Lycopodium Minerals Pty. Ltd. of Perth, Australia was appointed in December 2009 to prepare the Feasibility Study (to an estimated accuracy of +/-15%). The Study, which included pilot testing of the required processes, was completed in April 2011 and includes the following highlights:
• Proven and probable reserves of 68.132 million tonnes at average grades of: cobalt 0.26%, nickel 0.66%, and manganese 1.48%;
• A 23 year Project life;
• Average annual production for the first eleven years of full production:
▪ Cobalt 13.5 million pounds (6,115 tonnes);
▪ Nickel 7.25 million pounds (3,297 tonnes);
▪ Manganese Carbonate 138 million pounds (62,800 tonnes);
• Initial capital expenditure of $617.2 million (including average 10% contingency);
• After-tax Project net present value (“NPV”) of $669.6 million at an 8% discount rate (Geovic Mining’s 60.5% share is $405.1 million), assuming average three-year trailing prices (in accordance with SEC guidelines) of $26.20 per pound for cobalt and $8.71 per pound for nickel; and $0.54 for manganese, based on current prices for manganese carbonate;
• After-tax internal rate of return (“IRR”) of 22% based on 100% equity;
• Payback period of 41 months; and
• Total free cash flow (before debt service) of $2.14 billion over the Project life.
The estimated present value and future cash flow from future operations of the Project are particularly sensitive to cobalt prices. The feasibility study used 3-year average prices of cobalt for the period ended December 31, 2010, as required. Use of a lower assumed cobalt price in the study would have reduced estimated net present value and future cash flow. Information on project sensitivity to revenue and costs is included in the Technical Report in section 18-57.
Geovic and Geovic Cameroon are now seeking project financing to fund mine and processing plant construction. Geovic Cameroon has engaged U.K.-based Standard Chartered Bank and Geovic has engaged Canada-based Canaccord/Genuity as Financial Advisors to help secure Project debt and equity financing, in combination with potential strategic partnerships, and/or joint ventures, and sale of off-take. Standard Chartered Bank estimates that assuming a $15/lb Cobalt price, the project could support an indicated debt:equity ratio of 56:44 in a conventional project debt financing arrangement and suggested a possible capital structure that would include approximately $380 million in senior debt and about $20 million in equipment financing. Currently (July 2011) cobalt prices are trading in the range of $17 to $19/lb.
Additional Links
- Geovic Cameroon Feasibility Study - Executive Summary
- Geovic Cameroon Profile
- Geovic Cameroon EITI
- Geovic Cameroon Environmental Reports
- Geovic Cameroon PLC
- Geovic Cameroon Licenses and Permits
- Geovic Cameroon Photo Gallery
- Geovic Cameroon Technical Reports