Century Iron Mines Corp (TSE:FER) has unveiled the results of a preliminary economic assessment for its Duncan Lake joint venture project in northern Quebec, projecting a 20.1 percent internal rate of return (NYSE:IRR) pre-tax.
The project, which is comprised of around 534 mining claims covering 25,605.4 hectares in the western part of the La Grande Greenstone Belt, is 65 percent owned by Century, with the remainder held by Augyva.
The preliminary economics report, done by Met-Chem Canada, concluded that based on 100 percent ownership of the project, the net present value is estimated at $4.1 billion pre-tax.
Initial capital costs were pegged at $3.8 billion, for a project with a mine life of 20 years - generating 12 million tonnes per annum of iron pellet production - with a payback period of 4.2 years.
Average site operating costs were seen at $59.17 per tonne of pellet. Sustaining capital costs were estimated at $665 million, including $156 million for closure costs.
"We are very pleased with the strong economic potential shown by the Preliminary Economic Assessment for the Duncan Lake Project," said the company in a statement Friday, citing president and CEO Sandy Chim.
"The combination of significant tonnage, large NPV and good internal rate of return adds significant value to Century. We will continue to advance the project in a way that will best create value for our shareholders."
The report is based on the production of acid pellets year-round from the Duncan Lake deposits three and four, with mined resources to be transported to the concentrator near deposit three.
Concentrate will then be pumped from the concentrator 135 km by pipeline to the pellet plant close to the town of Chisasibi, on the shore of James Bay, after which pellets will be shipped to ports in Europe and China.
The company said Friday in its release that the report assumes 70 percent of annual pellet production is shipped to China, and 30 percent to Europe, at an average shipping cost of $29 per tonne pellet.
Century Iron, which is aiming to become a major iron ore producer, is one of the largest iron ore companies in Canada, in terms of number of claims by area. It has 6,493 claims and titles, covering some 198,779 hectares in the provinces of Québec and Newfoundland & Labrador.
It has interests in four iron ore projects, none of which yet generate revenue. The Duncan Lake project is located in northern Québec, while three others, Sunny Lake, Attikamagen, and the Altius properties, are located in the Labrador Trough region of Québec and Newfoundland & Labrador.
Last year, the company released an updated resource for Duncan Lake. Using a 16-per-cent iron cutoff, the project has a resource of 1.05 million tonnes, grading about 24 per cent iron, for 256,349 tonnes of contained ore in the measured and indicated category; and 563,000 tonnes, grading 24.7 per cent iron, for 139,061 tonnes of contained iron in the inferred category.
Separately, Century also announced Friday an update on discussions with Wisco International Resources regarding revisions to the original agreement proposed that will govern Wisco's investment in Duncan Lake.
Century has two blue-chip Chinese investors in Wisco and MinMetals, with the deep pockets required to unlock the potential of the company's assets. Wisco is the fourth-largest steel producer in China, controlling 3 billion tonnes of overseas iron ore resources.
Friday, Century said it anticipates that the final Duncan Lake shareholders agreement will include different terms than previously, with discussions still in progress.
The iron ore developer has made substantial progress at its properties of late, having released a series of resource estimates last year, and earlier this month unveiling the maiden NI 43-101 mineral resource estimate on its jointly owned Joyce Lake direct-shipping ore (DSO) deposit - part of the Attikamagen project.
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