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FAQ
QUALIFIED PERSONS STATEMENT
Mindoro's exploration programs are prepared and/or designed and carried out under the supervision of Tony Climie, P.Geol., who is a qualified person as defined by National Instrument 43-101 and is a competent person as defined by the JORC Code, and who has reviewed and verified the pertinent disclosure of exploration related technical information contained in this Frequently Asked Questions document. Mr. Climie is an executive and a director of Mindoro and is a member of the Alberta Professional Engineers, Geologists and Geophysicists Association. Mr. Climie has more than five years of experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he has undertaken. Mr. Climie has consented to the release of the pertinent exploration related technical information in the form and context in which it appears.
Boyd Willis, MAusIMM, who is a qualified person as defined by National Instrument 43-101, and a competent person as defined by the JORC Code, has reviewed and verified the disclosure of a development nature contained in this Frequently Asked Questions document. Mr. Willis has more than five years of experience which is relevant to the activity which he has undertaken and he has consented to the release of the pertinent development related information in the form and context in which it appears.
FORWARD LOOKING STATEMENTS
The Company's thermal processing and large scale production objectives are intended to provide an indication of management's current expectations and are still conceptual in nature. It is uncertain that sufficient resources will be established and if established that these resources will be converted into economically viable mining reserves. Until a feasibility study has been completed, there is no certainty that these objectives will be met.
The following may contain forward-looking statements including management's assessments of future plans and operations, and expectations of future production. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, the risks associated with the mining and exploration industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty with respect to results of exploration, the uncertainty of estimates and projections relating to production and the uncertainty of the availability of capital). The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company does not undertake to update forward looking statements except where required to do so by law.
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"License to Operate" is a combination of government licences to explore and develop projects such as Agata as well as the established social licence to operate based on Mindoro's 15 years of community and government relationships and environmental programs. | |
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Mindoro's prospects are in the Philippines, a highly prospective region for copper, gold and nickel discoveries. Mindoro's most valuable discovery to date is a large "laterite" (weathered rock) nickel deposit at Agata in the Surigao mining district of Mindanao Island. The resource and potential that Mindoro has defined in this region meet world class standards in terms of size and the objective of Mindoro is to establish a resource of 70 to 100 million tonnes of nickel laterite over time. The location of the nickel deposit has competitive advantages: it is within a couple of kilometers of deep ocean (good for shipping), close to markets for nickel product in China and elsewhere in Asia, and metallurgical testing indicates the ore may be processed relatively inexpensively to become a high value product. In addition Mindoro has limestone and pyrite deposits nearby that are key ingredients in the favoured acid-leaching process.
In addition to the nickel resource Mindoro has numerous prospective areas being drilled for gold-silver and copper. Gold resources have been defined in the Batangas area and there is excellent potential to expand these resources through further drilling. | |
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Nickel is what makes stainless steel "stainless" and stainless steel production accounts for about 80% of the demand for nickel globally. Economic growth in China and other developing countries in Asia have rapidly increased demand for products such as stainless steel due to the substantial increase in the population classified as middle class, with increasing purchasing power and aspirations for urban living, hence creating major increases in construction activity. Stainless steel production globally reached record levels in 2010 and mine development cannot currently keep pace with demand for nickel which may result in further price increases. | |
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Mindoro produced a preliminary economic assessment in March 2011 that indicated the Agata nickel deposit may be processed at relatively low cost via acid leach processing at costs of production of less than $3 per pound of nickel. The current nickel price is $12 per pound of nickel. An acid leach processing operation requires large amounts of capital to construct but the potential low operating cost of processing the deposit indicates it will be economic to develop an on-site acid leach processing plant and that the capital cost required to establish such a plant may be paid back in the first 5 years of a >15 years mine life operation. The company is also considering using a technique of thermal upgrading to produce product on an interim basis prior to completion of an acid leach processing operation in 3 to 4 years. A scoping study into the economics of thermal upgrading is nearing completion. | |
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The acid leach nickel processing project will require considerable capital. This is why the company is pursuing a staged development approach to enhance the attractiveness of the resource. Nearby nickel processing operations such as Sumitomo/Nickel Asia's Coral Bay operation produce over 20,000 tonnes of nickel product yearly at cash costs of less than $3 per pound. So the processing project represents good value for money as returns are significant and despite the initial cost being high the return on capital is fast due to the low cost of production.
Financing this project will be done in stages. The early stages of shipping thermally upgraded product may be financed by equity, possibly involving off take partners. The larger scale processing project may require the company to enter into partnership with a company interested in obtaining this resource (many companies have expressed strong interest and discussions are progressing). Another possibility is for Mindoro to develop a processing plant by contracting with infrastructure companies that specialize in building plants and to borrow money from funding agencies that have shown interest in such an approach. The support of the IFC, the World Banks financing arm and a shareholder of Mindoro, provides a "vote of confidence" and could assist in facilitating financing avenues for the company. | |
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Philippine laterite nickel ore is similar to that found in other parts of the world where processing by HPAL has been successful and this is demonstrated by the success of the nearby Coral Bay operation.
Thermal upgrading is also proven technology and is normally conducted as part of the ferro-nickel production process at the initial stage rather than stand alone. Mindoro is looking to upgrade the material on site so the ferro-nickel and nickel pig iron producers in China can feed the upgraded ore directly into their smelters. Metallurgical testing indicates that the Agata resource is suitable for both HPAL and thermal upgrading that would produce higher value material at a competitive cost. | |
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Mindoro has made appointments to the board and management team with expertise in development and marketing of nickel projects and there is a strong network of appropriate consultants. The expertise required to build and finance a major on-site plant is being established and it is anticipated that the process will be augmented by a major strategic partner. | |
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The Philippines Government is strongly supportive of the mining industry as evidenced by other mining operations developed in the area. Mindoro has environmental permits for the first stage of potential production and a strong track record of working with government at all levels.
Mindoro prides itself on having positive relationships with the surrounding communities based on working in these regions for many years. Throughout that period Mindoro has hired local people to assist in all aspects of its exploration programs. The region looks forward to the possibility of many permanent jobs. As a strong indicator of that support the IFC (arm of the World Bank) has made an investment in Mindoro and a major criterion for this decision was our superb record on environmental and community issues. Mindoro has also been given Philippine awards for community relationships and environmental performance. This places Mindoro in a strong position to obtain further permits for development of other properties. | |
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In exploring for gold, copper and silver deposits it was found that a major area of property had significant nickel deposits. The company recognized the nickel deposit as world class in terms of size and potential returns and represents an opportunity too good to pass up. Mindoro is still a gold and copper exploration company and drilling is taking place in two areas at this time (with other areas scheduled for drilling and testing). | |
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Mindoro operates the nickel and copper-gold projects in the Surigao District and copper-gold properties at Pan de Azucar in partnership with local Philippines company Minimax, and has a strong and cooperative long term relationship with that company.
At Batangas an international gold producer, Gold Fields Ltd, has been conducting exploration activities and may earn 75% of three contiguous projects. Gold Fields has been drilling copper-gold targets and is targeting major deposits. | |
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Mindoro has sufficient funds to complete pre-feasibility and feasibility studies into the initial development of the nickel project as well as the nickel and gold-copper drilling programs that are planned. Further financing will either depend on a nickel project development decision, and may involve a combination of equity and debt financing, and/or continued copper-gold exploration success and the need to equity-fund the drill-out of a major discovery. There is also the prospect of conversion of existing warrants and/or joint venture agreements. | |
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- Drilling is continuing for nickel throughout 2011 and is designed to expand the size of the resource which enhances the attractiveness of the project for potential strategic partners and strengthens the position of Mindoro in negotiations.
- An economic assessment consulting report produced in March 2011 has shown the merits of the nickel project.
- Pre-feasibility and feasibility and operational studies are being conducted by consulting groups and will be forthcoming throughout 2011
- On-site visits and evaluations by interested nickel product and stainless steel producers are ongoing with plans to advance discussions with potential for partnerships and/or off-take by the end of 2011.
- By the end of 2011 the company plans to have established the feasibility of developing the first stage of production as well as being at the pre-feasibility stage for a large scale processing plant.
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- Expand the drilling program at Pan de Azucar based on promising results to date.
- Conduct further drilling at Kay Tanda (Archangel) to increase the size of the resource then evaluate whether it is economically viable to develop as a gold- silver mine
- Monitor the Gold Fields program at the three locations where they are conducting joint venture activities at Batangas.
- Plan a program to build on the promising drill results from copper-gold "porphyry" targets such as Tapian-San Francisco and American Tunnels in the Surigao district.
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