MGX Minerals drills 87 m of 41.3% MgO at Driftwood

Jul 18, 2018

2018-07-18 06:09 ET – News Release

Mr. Jared Lazerson reports

MGX MINERALS ANNOUNCES COMPLETION OF GEOTECHNICAL DRILLING AT DRIFTWOOD CREEK MAGNESIUM; REPORTS 87 METERS OF 41.3% MAGNESIUM OXIDE

MGX Minerals Inc. has completed a geotechnical drill program and has released associated assay results from its Driftwood Creek magnesium project in southeastern British Columbia. The objective of the drill program was to establish pit wall stability and assess static pressure of groundwater using piezometers. A summary of assay results is provided in the associated table.

DDH        From      To   Interval      MgO    CaO   Al2O3   Fe2O3  SiO2    LOI    Total
            (m)     (m)        (m)      (%)    (%)     (%)     (%)   (%)    (%)      (%)

17BGC-1       3      90         87     41.3    2.1     1.5     0.9   8.1   45.6     99.9
17BGC-2     0.6      66       65.4       40    2.2     1.4     1.6   9.2   43.3     99.9
17BGC-4       1      24         23     36.7    0.5     1.3     0.6  20.6   39.8     99.7
17BGC-4      63   100.1       37.1     43.3    1.1     0.2     0.8   5.6   48.5     99.8
17BGC-6B     12      39         27     41.2    0.2     2.4     1.3  15.4   38.8     99.8
17BGC-6B     48      81         33     40.8    0.8     1.9     1.6  12.9   41.3    100.1
17BGC-6B     87      96          9     41.6    0.6     2.4     1.4  13.2   40.2      100
17BGC-8      30      42         12     41.4    0.5     0.4     1.5    10   45.9     99.8
17BGC-8      72      90         18     41.8    3.7     0.4     1.5   3.1   49.1     99.8

Based on the new results, the east zone appears to have considerable potential to expand the magnesite mineral zone to the east and north. The west zone has potential to contain additional magnesite with high silica, low calcium content in the north (this zone is characterized by a distinct purple-coloured magnesite). Based on the grade and interval of magnesite mineralization encountered in geotechnical drilling, the results will also be evaluated to further target additional exploration drill holes. The company plans to carry out an additional 3,350 metres of exploration core drilling at Driftwood in 2018. The intent of the drill program will be to further expand the drill indicated resource estimate.

Engagement of Hatch Ltd.

The company has engaged engineering firm Hatch Ltd. to conduct a comprehensive review and multiphased work program for Driftwood Creek. Hatch will review current mine planning and mine design, mineral processing process design, environmental and social impact assessment (ESIA), and permitting work completed to date. Additionally, Hatch will suggest project implementation logistics such as power, access, local infrastructure and more. The objective of the work program is to prepare Driftwood for completion of a National Instrument 43-101 prefeasibility study. The PFS will build on the positive NI 43-101 preliminary economic assessment (PEA) completed for Driftwood in March (see press release dated March 6, 2018). The PEA study was independently prepared for MGX by AKF Mining Services Inc., Tuun Consulting Inc. and Samuel Engineering Inc. in accordance with CIM (Canadian Institute of Mining, Metallurgy and Petroleum) guidelines and National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Highlights include:

Life-of-mine pretax cash flow during production of $1,051-million;
Pretax NPV5 (net present value at a 5-per-cent discount) of $529.8-million, internal rate of return of 24.5 per cent with a 3.5-year payback;
Posttax NPV5 of $316.7-million, IRR of 19.3 per cent with a four-year payback;
Initial capital costs of $235.9-million (total life of mine (LOM) — $239.8-million includes sustaining/closure costs of $3.9-million and contingency costs of $40.0-million);
Conventional quarry pit mine with a 1,200-tonne-per-day (tpd) process plant using conventional crushing, grinding, flotation upgrading, calcination and sintering to produce a saleable DBM product;
Average annual MgO production of 169,700 tonnes during a 19-year mine life;
LOM average head grades of 43.27 per cent MgO;
LOM MgO recoveries of 90 per cent;
LOM strip ratio of 2.4:1 of rock to mineralized material.

The tonnage and grades of the Driftwood Creek project mineral resource at a cut-off of 42.5 per cent MgO are shown in the associated table.

Class           Tonnes      MgO     Al2O3     CaO     Fe2O3     SiO2     LOI 
                 (000)      (%)       (%)     (%)       (%)      (%)     (%)

Measured       4,702.7    43.31      1.01    0.95      1.29     5.06   47.83   
Indicated      3,144.4    43.22      1.00    1.05      1.42     4.67   47.99   
M&I            7,847.1    43.27      1.00    0.99      1.35     4.90   47.89   
Inferred          55.8    42.95      0.93    0.66      1.43     6.07   47.46   

Notes and assumptions
 
(1) Mineral resources are not mineral reserves and do not have demonstrated 
economic viability. There is no certainty that all or any part of the 
mineral resources estimated will be converted into mineral reserves.
(2) The Lerchs-Grossman (LG) constrained shell economics used a mining 
cost of $8.82 (U.S.)/t, processing plus general and administrative costs of 
$106 (U.S.)per t, and a commodity price of $600 (U.S.)/t 95 per cent MgO 
DBM.
(3) Mineral resources are reported within the constrained shell, using a 
cut-off grade of 42.5 per cent MgO (based on a 20-year LOM) to determine 
"reasonable prospects for eventual economic extraction."   
(4) Mineral resources are reported as undiluted.
(5) Mineral resources were developed in accordance with CIM (2010) 
guidelines.
(6) Tonnages are reported to the nearest kilotonne (kt), and grades are 
rounded to the nearest two decimal places.
(7) Rounding as required by reporting guidelines may result in apparent 
summation differences between tonnes, grade and contained metal.
(8) M&I measured and indicated.

Quality assurance/quality control

The sample chain of custody is managed by MGX under the supervision of Andris Kikauka. Drill core is split at three-metre intervals, secured in a nearby storage facility and shipped to ALS Minerals. Blanks and standards are used for data verification purposes. ALS is an independent, ISO-certified analytical laboratory located in North Vancouver, B.C. ALS conducts whole-rock analysis using ME-XRF (X-ray fluorescence), two-gram-metre fused disc, and LOI by furnace.

About MgO

Magnesium oxide (magnesia) is a widely used industrial mineral that comes in various forms including dead burned magnesia (DBM) and fused magnesia (FM). End-uses include fertilizer, animal feed and environmental water treatment as well as industrial applications primarily as a refractory material in the steel industry. The majority of refractory-grade MgO used in the United States and Canada is imported from China. MGX aims to provide a stable, secure, long-term supply of MgO to the North American market with quality MgO products of consistent grade and purity.

Qualified person

Andris Kikauka, PGeo, vice-president of exploration for MGX Minerals, has prepared, reviewed and approved the scientific and technical information in this press release. Mr. Kikauka is a non-independent qualified person within the meaning of National Instrument 43-101 standards.

About MGX Minerals Inc.

MGX Minerals is a diversified Canadian resource company with interests in advanced material and energy assets throughout North America.

We seek Safe Harbor.

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