A preliminary economic assessment of Oceanic Iron Ore Corp.'s Hopes Advance iron ore project, part of the Ungava Bay property in Quebec, generated a base case posttax net present value of US$1.41 billion and a 17% internal rate of return, based on an 8% discount rate.
This compares to a posttax net present value of US$3.15 billion and a 17% IRR, at the same discount rate, outlined by a 2012 pre-feasibility study.
Both studies were based on an initial production of about 5 million tonnes per annum of dry concentrate followed by an expansion in the fifth year to about 10 mtpa. The PEA assumed a base case freight on board price of US$82.14 per tonne, versus US$100/t used in the 2012 PFS.
The company said Dec. 19 that it does not treat the 2012 study or the related mineral reserve estimates as current, although some of its scientific and technical information was used as a basis for the new study.
Oceanic also said the PEA's objective was to rescope the project profile using measured and indicated resources estimated within the Castle Mountain, Iron Valley and Bay Zone F deposits to reduce the upfront capital needed to bring the project to commercial production.
The PEA outlined initial capital expenditure of US$1.19 billion, compared to the previous forecast of US$2.85 billion.
The company said the project has a NPV/initial capex ratio of 1.18, which is low for a bulk commodity project. Average operating costs are projected at US$30.70/t over a 28-year mine life.
Oceanic said that in the coming months, it will focus on securing a strategic partner and additional financing to advance the project.