“South Crofty is not just an old operation, but a new project leveraged with existing infrastructure”
(Owen Mihalop - Strongbow’s COO)
Strongbow Exploration’s 100% owned South Crofty tin project is located in the Central Mining District of Cornwall, in the towns of Pool and Camborne, South West England.
Tin mining in this region dates back to 2,300 B.C. Large-scale production at South Crofty first started in the mid-1600s (the first documented production dated in 1592). The mine has been in operation intermittently since then, with the last closure in 1998 coming after a prolonged period of depressed tin prices. Historical production between 1700 to 1998 totaled over 450,000 tonnes of tin from the Central Mining District.
In March 2016, Strongbow entered into an agreement with Galena Special Situations Fund and Tin Shield Production Inc. to acquire a 100% interest in Western United Mines Ltd. (“WUML”) and Cornish Minerals Limited (Bermuda) (the “Companies”), which owned the South Crofty tin project plus additional mineral rights over a further 7,500 hecatres located in various parts of Cornwall.. The closing of the acquisition was announced on July 12, 2016.
The South Crofty project is fully permitted, having underground permission (mining licence) valid until 2071, planning permission to construct a new process plant and a permit from the Environment Agency to dewater the mine. The underground permission area covers 1,490 hectares and includes 26 former producing mines. Current infrastructure on the property includes four usable vertical shafts and a 300-meter decline. Regional infrastructure includes excellent access to power, roads and rail. The process plant site is adjacent to the railway line and accessible grid power crosses the property.
South Crofty mineralization occurs in laterally extensive lode structures, with some over 4 kilometers long, and extending to a vertical depth of at least 1,000 meters.
2016 NI 43-101 Mineral Resource Estimate
The 2016 Mineral Resource Estimate for South Crofty is split into two sections: the Lower Mine with tin only resources and the Upper Mine with polymetallic resources including copper and zinc.
- Lower Mine tin-only resource;
LOWER MINE MINERAL RESOURCE ESTIMATE AT 0.60% SN CUT-OFF TONNES (‘000S) SN GRADE CONTAINED SN (TONNES) Indicated Resource 1,660 1.81% 30,000 Inferred Resource 738 1.91% 14,100
- Upper Mine polymetallic resource, comprising tin, copper and zinc;
UPPER MINE MINERAL RESOURCE ESTIMATE AT 0.60% SNEQ CUT-OFF (1-12) TONNES (K) SN % CU % ZN % SNEQ % Indicated Resource 257 0.70 0.79 0.58 0.99 Inferred Resource 464 0.67 0.62 0.63 0.91
The full 2016 NI 43-101 report can be found here.
2017 Preliminary Economic Assessment
Strongbow published a N1 43-101 Preliminary Economic Assessment (“PEA”) on South Crofty in February 2017. Highlights from the PEA include:
- Base Case assumptions US$10/lb tin price / 5% Discount Rate
- Pre-tax Net Present Value $165.9 million
- After-tax Net Present Value $130.5 million
- Internal Rate of Return 23.4%
- Pre-production CAPEX $118.7 million
- Payback period of 3.8 years
- Life of Mine (LOM) sustaining CAPEX $83.8 million
- Mine Life of 8 Years
- Average LOM cash cost $3.36/lb tin equivalent
- Average LOM all-in sustaining cash cost $4.44/lb tin equivalent
- Mineralized material mined 2.575 million
- Average grade 1.55% tin equivalent
The full PEA report can be found here.
Osisko Royalty Purchase and Mine Dewatering
On August 30, 2017 the we entered into an agreement with our largest shareholder, Osisko Gold Royalties, to sell Osisko a 1.5% NSR royalty on the South Crofty project for C$7,170,000. Release of funds for the royalty purchase is subject to receipt of a permit to dewater the mine (received and announced October 23, 2017) and subject to shareholder approval (in process).
Proceeds from the royalty sale will be used to construct the water treatment plant.
Galena / Tin Shield - Future Considerations
Upon completion of the acquisition, from administration, of a 100% interest in the South Crofty tin project and associated mineral rights in Cornwall, UK in July 2017, Strongbow agreed to the following additional payments and share issuances as part of the purchase and sale agreement with Galena Special Situations Fund (“Galena”) and Tin Shield Production Ltd. (“Tin Shield”). Galena and Tin Shield would split the payments 52.5% to Galena and 47.5% to Tin Shield:
- Strongbow will issue 1,000,000 common shares to Galena / Tin Shield upon receipt of a permit to increase water discharge from the old mine workings from 10,000m3 per day to 25,000m3 per day.
- Strongbow will make a payment to Galena / Tin Shield totaling $2,000,000 (cash and / or common shares at Strongbow’s election) on the second anniversary of the approval vote by creditors for Wester United Mines Ltd.’s exit from administration (date set at June 10, 2018).
- Strongbow will issue 2,000,000 common shares to Galena / Tin Shield on delivery of a positive feasibility study or commencement of commercial production, whichever occurs first.
- Strongbow will make a cash and / or common share payment to Galena / Tin Shield equal to 25% of the Net Present Value (“NPV”) of the project upon making a decision to go into production. In the event that Strongbow’s market capitalization is less than the NPV of the project when a production decision is made, Strongbow will pay the equivalent of 25% of its market value to Galena / Tin Shield and the balance (between the 25% of market value and 25% of the NPV of the project) will be paid out as a 5% Net Profits Interest from production.
- In the event that Strongbow transfers any assets, rights, or entitlements to certain mineral rights which are not part of the core mineral rights (the “Other Mineral Rights”) to a third party before the agreed consideration has been paid to Galena / Tin Shield, then Galena / Tin Shield will be entitled to receive a payment equal to 10% of any consideration received for the Other Mineral Rights, to a maximum of $1,000,000.