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Foran Announces McIlvenna Bay Initial Phase Feasibility Study Results Outlining Robust Long-Life Operation

2022-02-28

TSX - Toronto Stock Exchange · Silver · Gold · Copper · Zinc · Lead · Canada · Technical Studies

Canada NewsWire

Pre-tax NPV 7% of C$1.5B and IRR of 46% at Current Commodity Prices

VANCOUVER, BC , Feb. 28, 2022 /CNW/ - Foran Mining Corporation (TSXV: FOM) (OTCQX: FMCXF) ("Foran" or the "Company"), is pleased to announce results from a Feasibility Study ("FS") on its expanded and re-scoped initial mine plan for its 100%-owned McIlvenna Bay project in east-central Saskatchewan . All currency figures are shown in Canadian dollars, unless otherwise noted.

Highlights:

Robust financial metrics in a world-class jurisdiction.

Table 1 – Pre-Tax NPV 7% Sensitivity Analysis

| | Zinc Price (US$/lb) | Copper Price (US$/lb) | | | | | | | $3.00 | Base Case¹ | Current² | $5.00 | $6.00 | | | Pre-Tax NPV 7% (C$M)³ | $1.00 | $347 | $550 | $1,078 | $1,159 | $1,565 | | Base Case¹ | $475 | $678 | $1,208 | $1,287 | $1,694 | | | $1.40 | $603 | $806 | $1,338 | $1,416 | $1,822 | | | $1.60 | $732 | $935 | $1,467 | $1,544 | $1,950 | | | Current² | $865 | $1,070 | $1,493 | $1,686 | $2,096 | | | $1.80 | $860 | $1,063 | $1,597 | $1,672 | $2,079 | | | ¹ Base case copper and zinc prices are US$3.50/lb copper and US$1.20/lb zinc. | | | | | | | | ² Current copper and zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is used. | | | | | | | | ³ Excluding current price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used. | | | | | | |

Mineral Reserve tonnes +127%, establishing an initial 18 year reserve life. Consistent and scalable production profile. High margin and focused on maximizing value per share.

Table 2 – IRR, Payback & Cash Flow Sensitivity Analysis

| | | Copper Price (US$/lb) | | | | | | | | Base Case¹ | Current² | $3.00 | $4.00 | $5.00 | $6.00 | | | Pre-Tax IRR | | 26% | 46% | 21% | 31% | 40% | 48% | | After-Tax IRR | | 22% | 38% | 18% | 26% | 33% | 40% | | After-Tax Payback (yrs) | 4.5 | 2.2 | 5.6 | 3.7 | 2.9 | 2.3 | | | LOM EBITDA (C$M) | $2,483 | $4,012 | $2,097 | $2,870 | $3,643 | $4,415 | | | LOM Free Cash Flow (C$M) | $1,179 | $2,280 | $906 | $1,460 | $2,015 | $2,565 | | | ¹ Base case prices are US$3.50/lb copper, US$1.20/lb zinc, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD. | | | | | | | | | ² Current prices are US$4.53/lb copper, US$1.64/lb zinc, US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD. | | | | | | | | | ³ Excluding the current price scenario, US$1.20/lb zinc, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used. | | | | | | | |

Capital-light development project. Delivering McIlvenna Bay with an ESG focus.

Dan Myerson , Foran's Executive Chairman & CEO commented;

"The completion of the FS is truly an excellent accomplishment by the entire team at Foran. It is important to be mindful that the study showcases only a snapshot in time of what our initial mine and centralized mill will look like, as we envision scaled expansions and future growth while sequencing in other deposits across the district.

As we continue to de-risk McIlvenna Bay with the ongoing advancement of the exploration decline, permitting, project financing, and our continued dynamic exploration campaign, I believe we are still in the early innings of understanding what this remarkable district has to offer. McIlvenna Bay is expected to be the centralized mill that could be expanded in phases as we continue to explore, define and potentially develop near-mine deposits and more within a 50km radius. Our land package is over 1,450 km², providing us with the canvas to explore in a systematic way. The neighbouring Flin Flon district has been operating for close to a century, and it is our vision to transform the Hanson Lake District into the next multi-decade mining camp.

Critically, Foran will be resolute in our effort to operate a mine of the future, targeting carbon neutrality and creating a sustainable asset for local communities in a decarbonizing world. Having the opportunity to power our site using renewable energy (hydropower), we are in a good position to deliver on our targets. Additionally, Foran will continue and always strive to be grateful, respectful and ensure a collaborative relationship with local communities, as this is essential in creating long-term mutually beneficial success. We are focused on education and training of local people to provide employment opportunities and build transferable skills. As the world continues to decarbonize, Foran will continue to search and evaluate circular economy opportunities, and pioneer ESG business initiatives to generate superior investment returns.

As the world hunts for new copper projects to satiate the urgent necessity to decarbonize our planet, geopolitical risks globally are impacting direct investment in regions where government regimes and taxation remain constant uncertainties. Operating in a global leading mining jurisdiction that is Saskatchewan further proves the amazing advantage Foran is fortunate and grateful to have. I am very proud of our team's accomplishments, and we look forward to delivering more exciting news throughout 2022 as we work towards our goals of building the next prolific mining jurisdiction in the world."

Sensitivity Analysis

At current prices of US$4.53 /lb Cu, US$1.64 /lb Zn, US$1,936 /oz Au, and US$24.52 /oz Ag, the project generates an after-tax NPV 7% of $1,055M , an after-tax IRR of 38%, with a payback period of 2.2 years from the commencement of production. Outlined below in Table 3 is a detailed sensitivity analysis across various commodity prices.

Table 3 – After-Tax NPV 7% Sensitivity Analysis

| | Zinc Price (US$/lb) | Copper Price (US$/lb) | | | | | | | | $3.00 | Base Case¹ | $4.00 | Current² | $5.00 | $6.00 | | | After-Tax NPV 7% (C$M)³ | $1.00 | $226 | $372 | $520 | $756 | $814 | $1,106 | | Base Case¹ | $320 | $466 | $613 | $850 | $907 | $1,198 | | | $1.40 | $411 | $559 | $706 | $943 | $999 | $1,291 | | | $1.60 | $505 | $652 | $799 | $1,037 | $1,092 | $1,384 | | | Current² | $601 | $750 | $899 | $1,055 | $1,194 | $1,489 | | | $1.80 | $597 | $745 | $892 | $1,130 | $1,185 | $1,476 | | | ¹ Base case copper and zinc prices are US$3.50/lb copper and US$1.20/lb zinc. | | | | | | | | | ² Current copper and zinc prices are US$4.53/lb copper and US$1.64/lb zinc. Under these scenarios US$1,936/oz gold, US$24.52/oz silver, and 1.27 USD/CAD is used. | | | | | | | | | ³ Excluding current price scenarios, US$1,600/oz gold, US$22.50/oz silver, and 1.26 USD/CAD is used. | | | | | | | |

Project Description

The McIlvenna Bay project is located in east-central Saskatchewan approximately 375km northeast of Saskatoon , and 85 km West of Flin Flon Manitoba , and is accessible year-round via a 18km all-weather road connected to Saskatchewan Provincial Highway 106.

The FS outlines a project designed to be a decline/shaft underground mining operation utilizing long-hole mining methods for ore extraction. Ore is expected to be processed via conventional single stage crushing circuit with a semi-autogenous grinding ("SAG") mill and ball mill design. Grinding is planned to be followed by a flotation circuit to produce both a copper and zinc concentrate for transportation from site to Flin Flon for shipment by rail to Canadian smelters and/or offshore.

The deposit at McIlvenna Bay includes several zones and two distinct styles of mineralization, typical of volcanogenic-hosted massive sulphide ("VHMS") deposits, massive sulphide mineralization and stockwork-style mineralization in the Copper Stockwork Zone ("CSZ"). The massive sulphide is a continuous mineralized horizon which averages 3.5m in thickness while the CSZ averages a thickness of 12.0m . The massive sulphide and the underlying CSZ are generally in contact with one another throughout the deposit, giving the bulk of the deposit an average thickness of 15.5m overall.

The capital and operating cost estimates in the FS reflect the current inflationary pressures being faced by the industry globally, however the relatively light capital intensity associated with the project helps mute the overall impact inflation has on economics, which remain robust.

McIlvenna Bay Project Bankable Feasibility Study

The FS was led and compiled by Stantec Inc. as the lead author. Stantec completed the detailed mine design and engineering, with Halyard Inc. completing process plant, paste plant and surface support infrastructure design. Knight Piésold worked in conjunction with both Stantec and Halyard on the Dry Stack Tailings Management Facility Design. RockEng prepared the geotechnical model, working closely with Stantec and the Foran site team. The McIlvenna Bay Mineral Resource estimate was prepared by Micon International Limited, and the Mineral Reserve estimate was completed by Stantec.

Table 4 - Key Summary Table

| Description | Units | Feasibility Study | | | Metal Prices/FX¹ | | Base Case | Current Prices | | Copper | US$/lb | $3.50 | $4.53 | | Zinc | US$/lb | $1.20 | $1.64 | | Gold | US$/oz | $1,600 | $1,936 | | Silver | US$/oz | $22.50 | $24.52 | | Currency Exchange Rate | USD/CAD | 1.26 | 1.27 | | Production Data | | | | | Reserve tonnes | Mt | 25.70 | 25.70 | | Copper Equivalent Grade² | % | 2.51% | 2.51% | | Copper Grade | % | 1.23% | 1.23% | | Zinc Grade | % | 2.39% | 2.39% | | Gold Grade | g/t | 0.47 | 0.47 | | Silver Grade | g/t | 15.3 | 15.3 | | Daily Throughput | tpd | 4,200 | 4,200 | | Annual Processing Rate | Mtpa | 1.51 | 1.51 | | Mine Life | years | 18.4 | 18.4 | | Blended Recoveries³ | | | | | Copper | % | 91.1% | 91.1% | | Zinc | % | 79.8% | 79.8% | | Gold | % | 88.6% | 88.6% | | Silver | % | 63.2% | 63.2% | | Average annual production (in concentrate) | | | | | Copper Equivalent - First 15-years² | Mlbs CuEq | 72.8 | 72.9 | | Copper Equivalent - Life-Of-Mine² | Mlbs CuEq | 65.4 | 65.6 | | Copper | Mlbs Cu | 34.5 | 34.5 | | Zinc | Mlbs Zn | 58.6 | 58.6 | | Gold | koz Au | 17.5 | 17.5 | | Silver | koz Ag | 435.2 | 435.2 | | Life-of-Mine (LOM) Operating Costs | | | | | Total Operating Costs⁴ | C$t/milled | $73.55 | $73.55 | | Opex + Sustaining Capex | C$/tonne | $91.94 | $91.94 | | C1 Copper Cash Costs (net of credits)⁵ | US$/lb | $0.26 | -$0.62 | | All-In Sustaining Costs (net of credits)⁶ | US$/lb Cu | $0.90 | $0.01 | | Capital Costs | | | | | Initial Capital⁷ | C$M | $368 | $351 | | LOM Sustaining Capital | C$M | $481 | $481 | | Financial Analysis | | | | | Pre-Tax NPV7% | C$M | $678 | $1,493 | | Pre-Tax IRR | % | 26% | 46% | | After-Tax NPV7% | C$M | $466 | $1,055 | | After-Tax IRR | % | 22% | 38% | | Payback Period | years | 4.5 | 2.2 | | ¹ Current prices and FX based on Feb 23, 2022 closing values. | | | | | ² CuEq metrics based on commodity prices under each scenario. | | | | | ³ Blended recoveries detailed in section below. | | | | | ⁴ Total Operating costs include mining, processing, G&A and Tailings costs. | | | | | ⁵ C1 Cash costs (net of credits) = total operating costs, plus treatment charges & refining costs, less by-product credits, divided by payable copper production. | | | | | ⁶ All-in Sustaining Costs = C1 Cash Costs (net of credits), plus LOM sustaining capital, plus royalties, divided by payable copper production. | | | | | ⁷ Initial Capital costs include pre-commercial production credits and costs, please refer to section below. | | | |

The planned site layout provides sufficient space for future expansion opportunities as the Company explores and potentially delineates additional satellite deposit opportunities. Figure 1 below highlights the surface infrastructure envisioned layout.

Figure 1 – Envisioned Site Layout

[](https://mma.prnewswire.com/media/1755015/Envisioned_Site_Layout.html)

Mineral Reserve Estimate

The 2022 Mineral Reserve Estimate was prepared by Stantec Inc., with an effective date of February 23, 2022 . Reserves total 25.7Mt, a 127% increase from its 2020 Reserve estimate of 11.3Mt. This represents a 66% reserve conversion rate from the existing 39.1Mt of indicated resources (vs. 49% reserve conversion from the prior 2019 resource estimate). The higher conversion rate is attributable to optimized mine design, which includes a reduction in minimum mining widths from 3.8m to 3.0m , and a lower net smelter return ("NSR") cut-off value, and higher commodity prices.

Reserves grade of 1.23% Cu, 2.39% Zn, 0.47 g/t Au and 15.3 g/t Ag use a US$90 /t NSR cut-off. These compare to 2020 reserve grades of 1.14% Cu, 4.01% Zn, 0.54 g.t Au and 21.0 g/t Ag using a US$100 /t NSR cut-off. The decline in by-product grades are predominantly attributable to the significant reserve additions for the Copper Stockwork Zone, which has higher copper grades and lower zinc grades than the Massive Sulphide Lens. Foran sees the opportunity for further reserve upside potential given the deposit remains open at depth and along strike, in addition to higher current commodity prices.

The Mineral Reserve Estimate is estimated using long-term consensus metal prices of US$3.50 /lb Cu, US$1.20 /lb Zn, US$1,600 /oz Au and US$22.50 /oz Ag. This compares to the 2019 Reserve Estimate pricing of US$3.30 /lb Cu, US$1.25 /lb Zn, US$1,310 /oz Au and US$16.20 /oz Ag. The reserve is summarized in Table 5 below.

Table 5 - McIlvenna Bay 2022 Probable Mineral Reserve Estimate ( US$90 /t NSR cut-off)

| Reserves | Tonnes

(Mt) | Cu Grade

(% Cu) | Zn Grade

(% Zn) | Au Grade

(g/t Au) | Ag Grade

(g/t Ag) | CuEq Grade (% CuEq) | | Main Lens – Massive Sulphide | 10.1 | 0.99 | 5.43 | 0.51 | 23.8 | 3.41 | | Copper Stockwork Zone | 15.6 | 1.39 | 0.41 | 0.45 | 9.9 | 1.92 | | Total Reserves | 25.7 | 1.23 | 2.39 | 0.47 | 15.3 | 2.51 |

| 1 Effective date February 23, 2022; CIM Definition Standards (May 10, 2014) were followed for Mineral Reserves; CuEq = copper equivalent; NSR = Net Smelter Return. Totals may not add due to rounding. | | 2 The base case mineral reserve is estimated based on a NSR cut-off value of US$90/t. NSR value was calculated using Cu, Zn, Au, Ag and high-grade caps were applied and include provisions for metallurgical recovery and estimates of current shipping terms and smelter rates for similar concentrates. Metal prices used are US$3.50/lb. Cu, US$1.20/lb. Zn, US$1,600/oz. Au, and US$22.50/oz. Ag. | | 3 Mr. Mark Hatton, P.Eng., of Stantec Inc., has reviewed and verified this mineral reserve estimate. Mr. Hatton is independent of Foran and is a "Qualified Person" within the meaning of NI 43-101. |

Mining

The FS proposes to mine ore using three different, but similar, longhole mining methods. Most ore will be mined by way of transverse stoping, and some longitudinal and Avoca stoping, depending on the orebody thickness and geometry. These longhole methods involve developing lateral drifts at 30 metre sublevel intervals and drilling holes between the levels and blasting the ore from the upper elevation. The ore will be extracted from the lower elevation of the stopes and transported to surface in the early part of the mine life and will be hauled to underground stations after the shaft is commissioned. Empty stopes will be filled with either paste backfill or waste rock from development headings.

Ore will be moved using battery electric vehicles ("BEVs"), which will help the company achieve its carbon-neutrality goals. The ramped-up 4,200 tonnes per day ("tpd") operation will require a fleet of seven haul trucks and six loaders. The use of BEVs will translate to operating cost efficiencies through reduced fuel consumption, and reduced ventilation and infrastructure requirements while improving air quality for all those working in the mine. Swappable batteries will be charged in special charging stations located underground. Underground development will be undertaken with innovative technology and state-of-the-art computerized development jumbos, which can install ground support, in addition to face drilling.

The FS assumes the company will be able to take advantage of the existing infrastructure associated with the previously announced exploration decline. Given the close proximity of the McIlvenna Bay reserve to surface, the company expects a relatively short timeline to initial ore mining and a relatively quick ramp up. As highlighted in Figure 2 below, the CSZ will constitute approximately 61% of the ore processed, while roughly 39% will be sourced from the massive sulphide zone.

Figure 2 - Ore Processing Source

[](https://mma.prnewswire.com/media/1755026/fig2Foran.html)

Production Shaft

Included in the FS is the eventual construction of a production shaft to benefit mine efficiency at depth and to support any potential future resource and mine expansion down dip of the existing resource. Under the current plans, the shaft will the developed in two separate legs. Development of the upper leg is expected to begin in Year 5 with completion of the (loading pocket) in Year 7 at a total cost of C$63.9M , which will lower operating cost in the lower levels of the mine, support future exploration initiatives and potential mine life extension.

The production shaft will be rectangular, extending from surface to a depth of 630m . Lateral development will precede excavation and furnishing allowing for the shaft to be developed from the bottom up in two separate sections resulting in lower cost than a conventional "blind sink" shaft. A pilot and slash method will be utilized for the excavation portion with the equipping of the shaft will be done from the top downwards.

A personnel hoist will also be installed within a separate compartment of the production shaft for improved effective work times and to facilitate a second means of egress from the mine.

Figure 3 – Long Section of Shaft and Underground Workings

[](https://mma.prnewswire.com/media/1755013/Long_Section_of_Shaft_and_Underground_Workings.html)

Processing & Recovery

The FS proposes ore processing to be conducted using primary crushing with a semi-autogenous grinding ("SAG") mill and ball mill design. The processing facility is expected to have a nameplate capacity of 4,200tpd or 1.51Mtpa. Ore transported from the mine will be dumped directly into the crusher or temporarily stockpiled on a lined pad for future processing.

Cyclone overflow from the grinding circuit, at an 80% passing size of 75 µm, will flow by gravity to the flotation area. Sequential rougher flotation, followed by regrinding and cleaner flotation, will produce a copper concentrate with an average grade of 28% Cu, ~240 g/t Ag and ~10 g/t Au, and a zinc concentrate with an average grade of 50% Zn, ~45 g/t Ag, <1 g/t Au and SiO 2 of <1.5%. Both concentrates do not contain any elevated deleterious elements and are considered very clean. The two products are very similar in physical form, being filtered cake (nominally 8-10% moisture) that will be transported in bulk by road to the railhead in Flin Flon, MB . The flotation circuit will also produce a pyrite concentrate that will allow the operation to maintain the sulphur content in the tailings storage facility ("TSF") at a level that prevents acid generation. Low sulphur tailings from the mineral processing facility will be thickened and filtered to reduce the moisture content and trucked to the TSF. The pyrite concentrate and a portion of the low sulphur tailings will be mixed with cement and pumped underground as paste backfill to fill mined-out stopes.

Figure 4 – Copper Equivalent ("CuEq") Production Schedule

[](https://mma.prnewswire.com/media/1755016/Copper_Equivalent_Production_ScheduleFrom_Commercial_Production.html)

Metallurgy

The ore contains chalcopyrite, galena, sphalerite, pyrite and pyrrhotite almost exclusively, with only very minor occurrences of other sulphide minerals observed. Pyrite predominated over pyrrhotite in all ore types. For non–sulphide gangue, copper stockwork contained mostly quartz, mica, and chlorite, while massive sulphide ores contained more carbonates, iron oxides and talc and less quartz. Clay contents were generally low in all ore types. The testwork demonstrated the ore is amenable to conventional flotation and that the two ore types can be blended so that they do not have to be handled separately throughout the operations.