Fort Cady Project

Overview

ABR is developing its 100% owned Fort Cady Borate Mine Project (the “Project”) located in the southeastern desert region of San Bernardino County, California. The Project is located near the town of Newberry Springs, approximately 50 km east of the city of Barstow and 4 km south of Interstate 40 (I-40). The Project area occurs approximately 200 km from Los Angeles (California) and Las Vegas (Nevada) in the Barstow Trough of the central Mojave.

Fort Cady is a highly rare and large colemanite deposit and is the largest known contained borate occurrence in the world not owned by the two major borate producers Rio Tinto and Eti Maden.

The Project and proposed operation is situated in an area with existing sealed roads, a gas pipeline, rail line and power lines. The Project sees the production of boric acid via solution mining of an ore body that is around 450m beneath surface. SOP is produced as a by-product of the production of HCl that is used in the solution mining process for boric acid.

The Project has a JORC mineral estimate of Resource of 120.4 million metric tonnes (“Mt”) at 6.5% B2O3 (11.6% Boric Acid equivalent [H3BO3] and 340 ppm Lithium (5% B2O3 cut-off) for 7.8 Mt contained B2O3 (13.9 Mt H3BO3):

  • Total Measured MRE of 38.87 Mt at 6.70% B2O3 (11.91% H3BO3) and 379 ppm Lithium (5% B2O3 cut-off grade) for 2.61 Mt contained B2O3 (4.63 Mt H3BO3)
  • Total Indicated MRE of 19.72 Mt at 6.40% B2O3 (11.36% H3BO3) and 343 ppm Lithium (5% B2O3 cut-off grade) for 1.26 Mt contained B2O3 (2.24 Mt H3BO3)
  • Total Inferred MRE of 61.85 Mt at 6.43% B2O3 (11.42% H3BO3) and 322 ppm Lithium (5% B2O3 cut-off) for 3.98 Mt contained B2O3 (7.07 Mt H3BO3)
View Resource Details

In total, in excess of US$60m has been spent at Fort Cady, including resource drilling, metallurgical test works, well injection tests, permitting activities and substantial pilot-scale test works.

The initial DFS completed in December 2018 for the Project contemplated a three phase Project which, in full production, would produce 408ktpa boric acid (“BA”) and 109ktpa sulphate of potash (“SOP”). The Company subsequently modified the Project in January 2019 by allowing for a low capex starter project, that split the previously announced phase One into phases One A and One B, which provided a lower upfront capital requirement to assist financing flexibility. Full production metrics remained unchanged from the initial DFS. The Enhanced DFS released in April 2020 builds on the starter project as announced in January 2019, by incorporating further engineering work completed, as well as value engineering that has seen a substantial increase in proposed SOP production. SOP production (in full production) has increased to 363ktpa from 109ktpa, an increase of 233%. Boric acid production remains unchanged at 408ktpa in full production, but importantly phase One A production has increased by 50 percent to 8.2ktpa from 5.4ktpa.

In June 2020, the Company secured total financing of A$77M to fully finance Phase One A, and was subsequently awarded its final operational permit in August 2020.  Substantive construction activities have commenced, with first production on track for Q3 CY2021.

Phase One A will target the production of 40kstpa of SOP (K2SO4) and 9kstpa of boric acid (H3BO3).

Phase One B will increase SOP production to 80kstpa, and boric acid production to 90kstpa.

The strength of standalone Phase One A financial metrics means the Company can continue to target financing this project in isolation. It also delivers a pathway for development of the Project through the phases, with the ultimate goal of reaching full production and the forecast EBITDA for the first full year of production of US$438.4million.

Fort Cady Project (Boric Acid and SoP Production)
Phase 1A Only
NPV8 US$224.3 million
IRR 35.9%
EBITDA in first full year of production US$19.6 million
Phase 1A & 1B Only
NPV8 US$773.8 million
IRR 32.4%
EBITDA in first full year of production US$73.2 million
Phase 1 & 2 Only
NPV8 US$1.709 billion
IRR 37.8%
EBITDA in first full year of production US$242.2 million
Full Project (Phases 1, 2, & 3)
NPV8 US$1.965 billion
IRR 39.4%
EBITDA in first full year of production US$438.4 million

The Project is forecast to directly employ around 250 people in full production. The Company is in the process of contracting economists to determine a sensible number of indirect employment that the 250 direct employees will create. The direct employment and indirect employment is expected to be meaningful to the local area.

The strength of standalone Phase 1A financial metrics means the Company can continue to target financing this project in isolation. It also delivers a pathway for development of the Project through the phases, with the ultimate goal of reaching full production and the forecast EBITDA for the first full year of production of US$438.4million.

Figure 1. Location of Fort Cady Project in California, USA.

Borate application

Thin-film-transistor (TFT) LCD screens

Definitive Feasibility Study

ABR completed an Enhanced Definitive Feasibility Study (eDFS) in April 2020, which builds on the starter project as announced in January 2019, by incorporating further engineering work completed, as well as value engineering that has seen a substantial increase in proposed SOP production. SOP production (in full production) has increased to 363ktpa from 109ktpa, an increase of 233%. Boric acid production remains unchanged at 408ktpa in full production, but importantly phase 1A production has increased by 50 percent to 8.2ktpa from 5.4ktpa.

Phase One A will target the production of 40kstpa of SOP (K2SO4) and 9kstpa of boric acid (H3BO3).

Phase One B will increase SOP production to 80kstpa, and boric acid production to 90kstpa.

Exceptional financial metrics for starter project (Phase One A) include:

  • Capex of only US$50.3m inclusive of a 13% contingency;;
  • Unlevered, post tax NPV8 of US$224.3m and IRR of 35.9%; and;
  • EBITDA in first full year of production US$19.6m.

The strength of standalone Phase 1A financial metrics means the Company can continue to target financing this project in isolation. It also delivers a pathway for development of the Project through the phases, with the ultimate goal of reaching full production and the forecast EBITDA for the first full year of production of US$438.4million.

 

Fort Cady Project (Boric Acid and SoP Production)
Phase 1A Only
NPV8 US$224.3 million
IRR 35.9%
EBITDA in first full year of production US$19.6 million
Phase 1A & 1B Only
NPV8 US$773.8 million
IRR 32.4%
EBITDA in first full year of production US$73.2 million
Phase 1 & 2 Only
NPV8 US$1.709 billion
IRR 37.8%
EBITDA in first full year of production US$242.2 million
Full Project (Phases 1, 2, & 3)
NPV8 US$1.965 billion
IRR 39.4%
EBITDA in first full year of production US$438.4 million

Borate application

Tablets and mobile phones

Project History

In total, over US$50m has been spent on the Fort Cady project, including licence acquisition, drilling and resource estimation (non-JORC), well testing, metallurgical testing, feasibility studies and pilot plant infrastructure. In addition, the project has previously obtained all operating and environmental permits required for commercial solution mining operations.

Duval Corporation evaluated the Fort Cady deposit in the late 1970’s and early 1980’s, completing over 30 diamond drill holes upon which the maiden non-JORC resource estimate was defined. An additional 17 production wells were completed in the following years which were used for injection testing and pilot-scale operations.

Historical records from Mountain State Minerals that produced boric acid on site in 1986 and 1987 show the operations achieved an average boric acid head grade of 3.7% without heating injection fluids, recirculating pregnant liquor solution (PLS) to boost recoveries or utilising waste water containing residual boric acid. This historical information is important as Mountain State Minerals was using the same injection fluids the Company is proposing to use.

Approximately 450 tonnes of boric acid was produced via solution mining of the colemanite ore body (Figure 2). Given the promising results of the pilot-scale tests, concentrated permitting efforts for commercial-scale operations began in early 1990. Final approval for commercial-scale solution mining and processing was attained in 1994.

Extensive feasibility studies, detailed engineering and test works were subsequently undertaken in the late 1990’s and early 2000’s. This included a second phase of pilot plant operations between 1996 and 2001 during which approximately 1,800 tonnes of a synthetic colemanite product (marketed as CadyCal 100) was produced. Commercial-scale operations were not commissioned due to low product prices and other priorities of the controlling entity. ABR executed a Share Purchase Agreement with the project vendors (Atlas Precious Metals Inc.) in May 2017 to purchase 100% of the project.

Figure 2. Fort Cady Site photo taken in October 2017 showing drilling activity, and pilot plant in the background.

Borate application

Borosilicate glass: pharmaceuticals

Geology

The project area is located in the Hector Basin of the Barstow Trough of the central Mojave. The Mojave comprises a structural entity commonly referred to as the Mojave block, and is bounded on the southwest by the San Andreas fault zone and the Transverse Ranges, on the north by the Garlock fault zone, and on the east by the Death Valley and Granite Mountain faults. The central Mojave region is made up of a number of relatively low mountain ranges separated by intervening basins which are floored primarily by alluvium. The central Mojave area is cut by numerous faults of various orientations but which predominantly trend to the northwest (Figure 3).

The Barstow Trough, which is a structural depression, extends northwesterly from Barstow toward Randsburg and east-southeasterly toward Bristol. It is characterised by thick successions of Cenozoic sediments, including borate-bearing lacustrine deposits, with abundant volcanism along the trough flanks. The northwest-southeast trending trough initially formed during Oligocene through Miocene times. As the basin was filled with sediments and the adjacent highland areas were reduced by erosion, the areas receiving sediments expanded, and playa lakes, characterised by fine-grained clastic and evaporitic chemical deposition, formed in the low areas at the centre of the basins.

Exposures of fine-grained lacustrine sediments and tuffs, possibly Pliocene in age, are found throughout the project area. Younger alluvium occurs in washes and overlying the older lacustrine sediments. The project area is covered by Recent olivine basalt flows from Pisgah Crater, which is located approximately 3.2 km east of the site (Figure 3 & Figure 4). Thick fine-grained, predominantly lacustrine mudstones appear to have been uplifted, forming a block of lacustrine sediments interpreted to be floored by an andesitic lava flow.

Figure 3. Geology and major structures in the Newberry Springs region.

There are three prominent geologic features in the project area (Figure 4):

  • Pisgah Fault, which transects the southwest portion of the project area west of the ore body;
  • Pisgah Crater lava flow located 3.2 km east of the site; and
  • Fault B, an unnamed fault, located east of the ore-body.

The Pisgah Fault is a right-lateral slip fault that exhibits at least 200m of vertical separation in the project area. The east side of the fault is upthrown relative to the west side. Fault B is located east of the ore body and also exhibits at least 200m of vertical separation. The borate ore body is situated within a thick area of fine-grained, predominantly lacustrine (lake bed) mudstones, east of the Pisgah Fault and west of Fault B. The central project area has been uplifted along both faults, forming an uplifted block. Test borings emplaced through the ore body reportedly show the presence of claystone at the base and around the evaporite/mudstone ore body. Exploration drilling in the project area indicate that the ore body lies between approximately 400m and 550m below ground level. The ore body consists of variable amounts of calcium borate (colemanite) within a mudstone matrix (Simon Hydro-Search, 1993).

Figure 4. Geology map of project region (modified from Dibblee, 1967).

Borate application

Thin-film-transistor (TFT) LCD screens

Permitting

The Company’s Fort Cady Borate Mine currently has the two key mining permits in effect. These permits are known as the:

  1. Plan of Operations and combined Environmental Impact Statement and Environmental Impact Report (issued by the Department of the Interior, Bureau of Land Management); and
  2. Mining Conditional Use permit and Approved Reclamation Plan (issued jointly by the San Bernardino Land Use Services Department and the California Department of Conservation, Office of Mine Reclamation (refer Figure 5 below).

The Environmental Impact Statement and Report considered the following:

The proposed action consists of the construction and operation of a borate production mine and process plant with the capability of producing 90,000 tons per year of borate product. The proposed facility would employ in-situ mining technology to mine an ore body containing colemanite, a boron-bearing, hydrous oxide (Ca2B6O11. 5H2O) mineral. The recovery of boron from the colemanite mineral would be accomplished by injecting a weak acid solution (no more than five percent hydrochloric acid, sulfuric acid, or a mixture of both in a water solution) into the ore body. The acid would react with the alkaline nature of the ore body to recover a mixture of borate product and calcium chloride, which would be dissolved in solution as products of the chemical reaction. This solution would be withdrawn from the well and pumped to the process plant where borate crystals would be precipitated. The remaining formation would be a porous matrix of clays and insoluble minerals. The void space that would result from the leaching process would constitute less than 12 percent of the formation, and the void space would ultimately contain water, therefore subsidence is not expected to occur.

Under the Plan of Operations the mine is expected to operate for around 130 years with the following components:

  • A 273 acre well field that would ultimately be comprised of up to approximately 200 wells;
  • A 10 acre process plant;
  • A 16 acre gypsum deposition area; and
  • Water pipelines, railroad spur and three access roads.

The Company is currently permitted for construction and has commenced initial construction activities in January 2020. In order to commence production, the Company requires one final substantive permit. The Company expects to receive this permit in Q3 CY2020.

Figure 5. Map showing operating permit boundary, site options, in place infrastructure and resource.

Borate application

Biocides

Solution Mining

The project will employ in-situ solution mining. In-situ technology was developed commercially in the 1970’s and has been applied to the commercial production of uranium, copper, salt, potash and soda ash. The use of in-situ technology to mine boric acid from the underlying borate deposit on-site was developed on the Fort Cady property in the 1980’s. Searles Valley Minerals currently utilises the in-situ solution mining technique at its borates and soda ash mine approximately 140km northwest of the Project area.

In simplified terms, the solution mining technique to be utilised at Fort Cady involves:

  • Pumping lithium-enriched brines and/or brackish water from approved water well sites to the processing plant site
  • Pumping the warm (38°C) and weak hydrochloric acid (5% HCl) make-up solution into the ore body approximately 425m below the surface;
  • A chemical reaction between the acid and the alkaline elements in the ore body (colemanite) which forms boric acid in the solution; and
  • The pregnant leach solution then being extracted to the surface by a reverse-pumping process (Figure 6).

Figure 6. Schematic showing well field and solution mining production holes.

Borate application

Fertiliser micronutrient

Processing

The Company has optimised the process design for the Project with the release of the Enhanced Definitive Feasibility Study (eDFS) in April 2020, by incorporating further engineering work completed, as well as value engineering. Following is a brief summary of the process design as envisaged by ABR. A simplified process flow chart is shown in Figure 7.

In parallel with ongoing testworks, the Company is exploring options to sell by-product gypsum into the large Californian gypsum market.

Figure 7. Simplified process flow chart for the Fort Cady Project.

Lithium application

Lithium-ion batteries

Infrastructure

The project area is exceedingly well served by infrastructure. (Figure 8). The I-40 highway and the main BNSF rail line serving Los Angeles run alongside each other just 4km to the north of the project area. There is a major gas pipeline also running along this infrastructure corridor and the main electricity trunk line owned by Southern California Edison runs directly through the project area. The area is served by Barstow-Daggett county airport located just 20km away from the project site, on the way to Barstow.

The two busiest ports in the UA are in close proximity to the Fort Cady Project. These are the port of Los Angeles and its sister port Long Beach.

Figure 8. Highlighting existing and permitted infrastructure.

Borate application

Soaps and detergents

Benefits

The Planning Commission of the County of San Bernardino (“the Commission”) in approving the Conditional Use Permit and Reclamation Plans for the Project in 1994 identified that development of the Fort Cady mine would generate the following social and economic benefits. Many of these still hold true, including:

  • The Barstow area is currently experiencing a high unemployment rate. Phase 1 project construction is expected to take nine months and require approximately 76 workers.
  • The project is expected to employ approximately 80 full time workers during the operational life of Phase 1 of the project, approximately 65 of whom would be from the local area. Most of the workers, with the exception of skilled engineers, geologists, and the operation manager, would not require specific mining-related skills; in-situ mining equipment (pumps and other related machinery) can be operated by local trained workers, and no prior experience is considered necessary.
  • With approximately 80 employees, the Project would be one of the largest manufacturing employers in the immediate Barstow area.
  • In addition, the project would not only be a source of wages and salaries for local residents, thus adding another source of personal income to the local economy, but also the construction itself would require various goods and services from local suppliers.
  • Sales taxes on these purchases as well as those on taxable retail purchases of project personnel would accrue to city and county governments.
  • The proposed action is expected to result in local governments experiencing a small but positive cash flow, as revenues from sales and property taxes should exceed the incremental costs of providing public services to the project.
  • Recovery of a valuable resource from the site which will contribute to the state and national economy.

Borate application

Borosilicate glass: OLED displays

Competent Persons Statement

The information on this website that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information prepared by Mr Louis Fourie, P.Geo of Terra Modelling Services. Mr Fourie is a licensed Professional Geoscientist registered with APEGS (Association of Professional Engineers and Geoscientists of Saskatchewan) in the Province of Saskatchewan, Canada and a Professional Natural Scientist (Geological Science) with SACNASP (South African Council for Natural Scientific Professions). APEGS and SACNASP are a Joint Ore Reserves Committee (JORC) Code ‘Recognized Professional Organization’ (RPO). An RPO is an accredited organization to which the Competent Person (CP) under JORC Code Reporting Standards must belong in order to report Exploration Results, Mineral Resources, or Ore Reserves through the ASX. Mr Fourie has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a CP as defined in the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

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