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Cascadero Copper Corp
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Cascadero's PEA pegs Taron at 23.85 Mt of 2,131 ppm Cs

2024-05-15 17:31 ET - News Release

Dr. George Gale reports

CASCADERO COPPER ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT ON THE TARON CESIUM PROJECT IN ARGENTINA

Cascadero Copper Corp. has successfully completed its preliminary economic assessment (PEA) on its Taron caesium project located in Salta, Argentina. The PEA indicates that the drilled portion of the Taron property has 23.85 Mt (million tonnes) at a grade of 2,131 ppm (parts per million) caesium. Using the company's patented extraction process developed at the University of British Columbia and a caesium formate price of $50,000/t, the project has 14-plus years of mine life with a NPV (net present value, 10-per-cent discount rate) of $79-million (U.S.), an IRR (internal rate of return) of 14 per cent and a payback period of less than five years. The PEA was completed by Wardell Armstrong International (WAI).

  • Resource of 50,810 tonnes of contained caesium;
  • 23.85 Mt resource at a grade of 2,131 ppm caesium with significant potential to grow;
  • 14-plus-year mine life;
  • Strong NPV based on conservative pricing of caesium formate -- 20-per-cent increase in prices can produce almost four times the NPV;
  • NPV (10) (after-tax) of $79-million (U.S.), with an IRR of 14 per cent (after tax) and payback period less than five years of operations;
  • Taron has the potential to be the world's foremost supplier of caesium.

In recognition of the opaque nature of the caesium market, WAI conducted a resource sensitivity assessment at varying caesium prices. An increase in caesium formate price of only 20 per cent increases the NPV by almost four times.

The PEA assessed the development of the Taron project mineral resource by open pit mining, using the company's patented high-pressure acid leaching (HPAL) process to produce a final solution containing caesium hydroxide to which formic acid is added for the production of an 80-per-cent caesium formate brine.

Cascadero's interim chief executive officer and interim president, Dr. George Gale, stated: "This preliminary economic assessment supports our assertion that the Taron caesium project has the potential to be the next primary caesium producing mine in the world. The results of the base case study show positive economics, a long mine life and modest upfront capital cost, all in a favourable mining and permitting jurisdiction."

Dr. Gale continued: "The Taron project contains a globally significant minable resource that has the potential to be greatly expanded by further exploration because only the portions of mineralization that crop out have be drilled to date. The deposit is a thick accumulation of poorly consolidated gravels and sands that were mineralized by late hot spring fluids, which flowed through the sediments and precipitated a cement of caesium-bearing minerals on the rock particles. The potential to expand the resource outside the current resource area is very likely as caesium-bearing material has been found some five km from the current resource. With caesium on the critical minerals lists of the International Energy Agency, as well as United States, Canada, South Korea and Japan, and the lack of any meaningful supply worldwide, Cascadero's Taron project has the potential to be the world's next globally valuable and viable mining operation."

Report will be filed on SEDAR+ within 45 days of this announcement.

Wardell Armstrong International (WAI) was retained by Cascadero to complete the PEA for the Taron caesium project located in the province of Salta, Argentina, and to prepare an independent technical report in accordance with the requirements of Canadian National Instrument 43-101 (NI 43-101) -- Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. The prime purpose of the PEA is to evaluate the economic viability of the project and to establish an economic concept to justify further expenditure on this project. In addition, the report supports public disclosure of a PEA that is based on the mineral resource Estimate (MRE) dated Jan. 31, 2024, as prepared by WAI. The NI 43-101 PEA technical report will be filed on SEDAR+ within 45 days of this announcement.

Caesium market summary

Caesium is primarily used in formate brines to assist in the drilling of high temperature and pressure oil and gas production wells. Other applications include the production of caesium compounds such as caesium bromide for use in infrared detectors, optics, photoelectric cells, scintillation counters and spectrometers.

The Tanco mine in Manitoba, Canada, is the world's only currently viable caesium mine, retaining approximately 116,400 tonnes of primary caesium resources. In 2013, however, instability of the mine's crown pillar forced its closure and it is unclear if mining operations have since been able to restart. In 2019, Tanco was purchased by Sinomine, a Chinese company that now claims to be the world's only manufacturer and supplier of caesium formate with a market share nearing 100 per cent. Sinomine also owns the world's only other caesium mine, namely the Bikita mine in Zimbabwe, however its caesium resources are thought to now be depleted. Sinomine also underwrote the caesium supply output from the Sinclair mine in Australia, however Sinclair completed its mining and transportation of all economically viable ore in early 2019.

As of the end of 2021, Sinomine global reserve of caesium formate was stated as 25,764 bbl (barrels) (equals 10,000 tonnes), containing approximately 5,849 tonnes of caesium metal equivalent. Based on modest assumptions for the caesium price, the PEA indicates, the current resource at Taron is in the region of 40,000 tonnes of caesium formate brine (at 80-per-cent concentration) with 27,000 tonnes of contained metal.

As there are no confirmed active mining operations that can serve as a primary source for caesium metal products, there is a high potential for mid- to long-term supply issues to exist, particularly when considering anticipated future market demand increases.

Preliminary economic assessment summary

WAI recommends caesium formate brine be the assumed saleable product for the Taron PEA for the following reasons:

  • Caesium formate is the largest and most sustainable market for caesium products;
  • No confirmed active mining operations potentially creating long-term supply issues;
  • Tangible reasoning for anticipating an increase in product demand.

The Taron property consists of five contiguous mineral tenures, approximating 8,179 hectares (83 units) in area. The tenures are registered to Cascadero Minerals S.A., which is 100 per cent owned by Cascadero Minerals Corp., a Canadian company, which is 70 per cent owned by Cascadero Copper Corp. and 30 per cent owned by Regberg Ltd (RB). CMC operates as a 70-per-cent CCD and 30-per-cent RB joint venture.

A summary of the life of mine discounted cash flow analysis is presented in the attached table. Utilizing a caesium formate price of $50,000 (U.S.)/t and a 10 per cent discount rate, the NPV is $79-million (U.S.), with an IRR of 14 per cent. The project payback period is estimated to be less than five years of operations.

Capital and operating costs

The capital and operating cost estimate summaries for the Taron project are presented in the next two attached tables, respectively. By using a contract miner, mining capital costs are minimized, but at the expense of higher mining operating costs.

Closure costs were incorporated into the operating costs for pit optimization purposes (at $1.0 (U.S.) per processed ore tonne) for the appropriate consideration of mine closure obligations, however the overall closure cost has been allocated as a capital cost for the project financial evaluation and is accrued at the end of the mine life. No allowance for salvage has been included in the closure cost assumptions.

Economic analysis

The economic analysis uses a discounted cash flow (DCF) approach, based on a post-tax, unleveraged, real-term basis, to determine the net present value (NPV), payback period (time in years to recapture the initial capital investment) and the internal rate of return (IRR) for the project. Annual cash flow projections were estimated over the life of the mine based on the estimates of capital expenditures, production cost and sales revenue. The analysis has been conducted in real terms with no consideration given to inflation or escalation of costs or prices over the life of the project.

The long-term caesium formate brine price used in the economic analysis has been evaluated by WAI, based preliminary market analysis suitable for a PEA level of study, and agreed with the company at $50,000 (U.S.)/t (no escalation), in real terms, over the life of the mine. A payability rate of 97 per cent has been applied, to reflect 3-per-cent royalty payments. No price inflation or escalation factors were taken into account.

The economic analysis is prepared on a 100-per-cent equity project basis and does not consider financing scenarios. A 10-per-cent real discount rate has been used in the analysis. The economic model is based on the following assumptions and exemptions:

  • Average throughput rate of 1.75 Mtpa (million tonnes per annum) open pit operation extracting mineralized material from which caesium formate brines can be produced;
  • Caesium formate brine price is based on consensus equity research long-term commodity price projections and cost estimates in United States dollars;
  • Capital costs (capex) and operating costs (opex) have been estimated at a preliminary economic assessment level of confidence (plus or minus 40 per cent);
  • The contingency costs have been excluded from the capex schedule;
  • All cost estimates have been calculated in 2024 money terms and, as such, the life of mine operating cost forecasts do not account for inflation.

The total capital cost estimate for the Taron project is estimated at $596.3-million (U.S.), of which the process plant equates to $427.5-million (U.S.). The initial capital cost is $477.7-million (U.S.) with the remaining allocated to sustaining capital ($96.4-million (U.S.)) and closure costs ($22.2-million (U.S.)). By using a contract miner, mining capital costs are minimized -- at the expense of higher mining operating costs.

The project operating cost includes $4.0 (U.S.)/t for mining, $84.1 (U.S.)/t processing, 30 U.S. cents/t tailings management, and $1.0 (U.S.)/t for G&A (general and administrative). This equates to a total LOM operating cost of $2,027.0-million (U.S.), or an average LOM operating cost of $91.5 (U.S.)/t ore processed.

The resultant DCF (discounted cash flow) analysis, at a discount rate of 10 per cent, has presented a positive NPV of $79-million (U.S.), with an IRR of 14 per cent. The project payback period is estimated to be in the fifth year of operations.

Sensitivity analysis flexing the project NPV shows that the project is most sensitive to commodity price (and consequently grade). The project NPV shows lesser sensitivity to operating expenditure, followed by capital expenditure and discount rate.

At a 10-per-cent discount rate, the NPV is $79-million (U.S.), with an IRR of 14 per cent. The project payback period is estimated to be in the fifth year of operations. A summary of the key project economics is presented in the attached table.

A sensitivity analysis respective to variations in the caesium formate brine price, operating costs, capital costs and discount rate was conducted to examine the sensitivity of the model to changing economic conditions. As can be seen in a figure in the original version of this release, the project is most sensitive to caesium pricing, less sensitive to operational and capital costing, and least sensitive to discount rate.

Mining

Mining will be from an open pit operation utilizing traditional drilling, blasting, loading and hauling techniques, although it is currently thought that a proportion of the mined material will be free-digging. The PEA assumed employment of a mining contractor, which will reduce capital costs and accommodate fluctuations in annual material movement quantities. Ore material from the Taron pit will be hauled approximately three kilometres (ex pit) directly to the run-of-mine (ROM) pad adjacent to the process plant. Waste rock will be hauled to a waste rock storage facility (WRSF) approximately two km north of the pit exit. Mining rates peak at 1.75 Mtpa and continue over a period of 14 years. As the deposit outcrops at surface, no pre-stripping phase is required with the first four years of mining producing minimal amounts of waste rock.

Recovery methods

To define the most economically viable recovery method for use in the PEA, tradeoff studies were completed concerning the two processing routes under consideration for the Taron deposit, namely:

  • Atmospheric leaching;
  • High-pressure acid leaching (HPAL).

Although the atmospheric leaching option demanded significantly less capital investment whilst offering improved process recoveries, high acid consumption rates resulted in unsustainable operational costs -- thus significantly impacting the minable resource potential.

The comparatively lower acid and limestone consumption offered by HPAL more than compensates for the additional project capex demands and lower process recoveries. Consequently, and based on available test work data, the HPAL option was selected as the process method for the PEA works.

For initial design purposes, the ROM grade of 0.2144 per cent Cs is assumed and processed at a rate of 1.75 Mtpa for a LOM of 14 years. Assuming 350 operating days for a plant availability of 95.9 per cent, a throughput of 5,000 tpd (208 tph) is required. A conceptual process flowsheet considering the HPAL method is described as follows:

  • ROM ore will be delivered to a feed bin and conveyed to a rotary breaker. Coarse gangue material will be rejected as waste with undersize conveyed to a ball mill. The ball mill will operate in closed circuit with cyclone overflow from hydrocyclone classifiers feeding the autoclave circuit. Two autoclave circuits will operate in parallel to provide operational redundancy. After leaching, the resulting solution containing the dissolved caesium and other impurity elements reports to the downstream caesium extraction plant. Aluminium sulphate is added to the leach solution followed by cooling to promote rapid formation of the impure caesium alum crystals. After recovery by filtration, the crystals are redissolved and subsequently cooled once again to form pure caesium alum crystals, before a final stage of dissolution for treatment with barium hydroxide in two stages.
  • The first stage removes aluminium as aluminium hydroxide and some barium sulphate. The second stage then removes the balance of the sulphate as barium sulphate.
  • The final solution contains caesium hydroxide to which formic acid is added for the production of an 80-per-cent caesium formate brine for direct sale to market.

Market studies and sensitivity analysis

Caesium is primarily used in formate brines to assist in the drilling of high temperature and pressure oil and gas production wells. As such, WAI have conducted the study on the assumption that caesium formate brine will be the primary saleable product for the Taron project.

Based on a PEA level market assessment and using the information available, WAI derived a long-term caesium formate brine cost of $50,000 (U.S.) per tonne (at 80-per-cent concentration). However, due to caesium not being readily traded in commercial quantities and the market for caesium products being notoriously opaque in nature, little publicly available data on supply/demand and pricing are available to reliably verify the price assumptions used. This being said, WAI regard the price derivation to be a suitable estimation at this stage of project development.

In recognition of the of the opaque nature of the caesium market, WAI conducted a resource sensitivity assessment at varying caesium prices. The results are summarized by a graph in the original version of this release, with the US$50,000 (U.S.) per tonne PEA scenario highlighted in red.

Environmental and social

The necessary and preliminary environmental and social baseline study has been completed and submitted to the Commercial Mines Court of Registry of the Ministry of Mining. The environmental permit allowing surface exploration in the project area requires the Biannual Renewal of the Environmental Impact Report (BREIR). The project is currently licensed under the December, 2022, decision, however the baseline data for the 2022 BREIR is now considered to be outdated and therefore requires addressing.

The project is in an area of very low population density with no permanent dwellings or farmsteads located on the concession area, the nearest settlement being 30 km to the northwest at Santa Rosa de los Pastos Grandes (population of 150). Grazing animals (sheep and llama) do occasionally pass through the licence area, possibly taking advantage of the small streams flowing broadly southeast -- northwest.

Additional baseline studies will need to take place in order to collect information on the complete environmental and social setting of the project. Particular attention should be given to a consistent flora and fauna baseline, along with hydrology and soil characterization. This will allow modification of project components and potential avoidance of significant impacts.

Notwithstanding any shortcomings highlighted, and the requirement to instigate baseline and other studies, at this stage of work the project does not appear to present any significant challenges to development and securing the necessary permits to do so.

Mineral resource estimate

Geological modelling, block modelling and grade estimation for the Taron deposit have been carried out by GeoSim Services Inc. The work completed by GeoSim was done in preparation for the 2017 NI 43-101 technical report for the Taron deposit however this was considered a mineral inventory as reasonable prospects of eventual economic extraction (RPEEE) could not be declared at the time. WAI has reviewed all work completed by GeoSim and prepared the block model for optimization and the application of current RPEEE factors for reporting mineral resources in accordance with the guidelines of the JORC (Joint Ore Reserves Committee) Code (2012).

The resultant estimated grades were validated against the input composite data. Resource classification was undertaken in accordance with the guidelines of the JORC Code (2012) and was based on an assessment of geological and grade continuity, an assessment of assay quality, and an assessment of available bulk density data. Mineral resources were further limited based on an expectation of eventual economic extraction to an optimized open pit shell generated using appropriate economic and technical parameters. Mineral resources were reported to an economic cut-off grade of 1,239 ppm Cs as calculated from optimization parameters and summarized in the attached table.

Technical information in this press release has been reviewed and approved by Dr. George H. Gale, PEng, and Tony Cau, BScEng, for Cascadero, both of whom are considered to be qualified persons under Canadian National Instrument 43-101.

Notes on mineral resources estimate

  1. Mineral resources are not mineral reserves and have not demonstrated economic viability. Additional drilling will be required to convert inferred mineral resources to indicated mineral resources or mineral reserves. There is no certainty that any part of a mineral resource will ever be converted into mineral reserves.
  2. The effective date of the mineral resource estimate is Jan. 31, 2024.
  3. All figures are rounded to reflect the relative accuracy of the estimate, and apparent errors may occur due to rounding.
  4. Mineral resources reported from optimization at SMU 10 m by 10 m by 10 m.
  5. Mineral resources are limited to an optimized open pit shell based on appropriate economic and mining parameters.
  6. Caesium prices during optimization were $50,000 (U.S.)/t for a caesium formate brine product at 80-per-cent concentration.
  7. Mineral resources have been classified in accordance with the guidelines of the JORC Code (2012) by Che Osmond, an independent competent person as defined by JORC.
  8. The mineral resource estimate has not been affected by any known environmental, permitting, legal, title, taxation, sociopolitical, marketing or any other relevant issues.
  9. Mineral resources are reported to a cut-off grade of 1,239 ppm Cs for potential open pit mining operations. Cut-off grades are economic cut-off grades based in optimization parameters provided by Cascadero and assumptions made by WAI.

Technical information in this press release has been reviewed and approved by Dr. Gale, PEng, and Tony Cau, BScEng, for Cascadero, both of whom are considered to be qualified persons under Canadian National Instrument 43-101.

About Cascadero Copper Corp.

Cascadero Copper is focused on the exploration and development of its copper, gold and caesium properties located in Salta, Argentina. In addition to the Taron caesium project, the company has a joint venture with Golden Minerals on its Sarita Este licence where Golden Minerals has drilled out a small gold discovery. Cascadero also has significant landholdings adjacent to First Quantum Minerals' Taca Taca copper-gold-molybdenum porphyry deposit. The company also holds a number of other exploration properties that can be viewed on the company website.

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