Great Atlantic: North America's Only FS-Stage Salt Project
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Feasibility Study
FS Technical Summary
Overview
The FS considers developing Great Atlantic into an underground operating mine capable of producing 2.5 Mtpa of rock salt with key mine access and plant infrastructure designed for 4.0 Mtpa. Construction of the mine would occur over three years, with access to the deposit via twin declines. Extraction of rock salt would occur using the room and pillar method, with continuous mining equipment. Salt would be processed to a specific size and grade using a crushing and screening plant located within the underground mine, and then brought to surface via conveyor belts. An overland conveyor would transport the rock salt from the mine area to the existing Turf Point port for loading onto ships destined for Canadian and American markets. The FS builds upon the January 30, 2023 PEA and will form the basis for environmental licensing and permitting and the next phase of engineering design.
Mineral Resources
Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral Resources and Mineral Reserves (CIM (2014) definitions) were used for Mineral Resource classification. The updated Mineral Resource currently includes 383 Mt of Indicated Mineral Resources plus 868 Mt of Inferred Resources. Table 1 provides a summary of the Great Atlantic Mineral Resource estimate prepared by SLR, with an effective date of May 11, 2023. The results from the January 30 PEA are shown for comparison.
Table 1: Summary of Great Atlantic Mineral Resources
Notes:
- CIM (2014) definitions were followed for Mineral Resources.
- Mineral Resources are estimated without a reporting cut-off grade. Reasonable Prospects for Eventual Economic Extraction were instead demonstrated by reporting within Mineable “Stope” Optimised (MSO) shapes, with a minimum height of 5 m, minimum width of 20 m, length of 40 m, and minimum grade of 90% NaCl, with a 5 m minimum pillar width between shapes.
- Bulk density is 2.16 t/m3.
- Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
- Mineral Resources are inclusive of Mineral Reserves.
- Salt prices are not directly incorporated into the Mineral Resource MSO minimum target grades, however, the mean Mineral Resource grades exceed the 95.0% NaCl (± 0.5%) specification outlined in ASTM Designation D632-12 (2012).
- Numbers may not add due to rounding.
The QP is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Reserve estimate.
Mining and Mineral Reserves
Mining designs, development plans, and schedules have been prepared for a fully electric, mechanized room and pillar mining operation. It is envisaged that salt will be mined using continuous miners and hauled by truck to a lump breaker and conveyor system to move material to a crushing and screening plant located underground. The FS is based upon the initial production of 2.5 Mtpa of rock salt product with key mine infrastructure capacity to expand to 4.0 Mtpa. A summary of Mineral Reserves, effective July 31, 2023, is shown in Table 2.
Table 2: Summary of Great Atlantic Mineral Reserves
Notes:
- CIM (2014) definitions were followed for Mineral Reserves.
- All Mineral Reserves are classified as Probable Mineral Reserves, with extents limited to the Indicated Mineral Resource wireframe.
- Salt prices are not directly correlated into the Mineral Reserve estimate, however the mean Reserve grades exceed the 95.0% NaCl (± 0.5%) specification outlined in ASTM Designation D632-12 (2012) and based on a detailed salt market review to determine economic viability.
- A minimum mining height of 5.0 m and width of 16.0 m were used for production rooms.
- Sterilization zones 8.0 m below top of salt and 5.0 m above bottom of salt have been applied.
- A mining extraction factor of 100% was applied to all excavations.
- Bulk density is 2.16 t/m3.
- Planned process recovery is 95%.
- Numbers may not add due to rounding.
The QP is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the Mineral Reserve estimate.
The mine will be accessed through two declines driven to 240 Level (nominally 240 m below surface) where the process plant and related infrastructure will be located. One decline will provide fresh air into the mine and be used for vehicle access, while the other will exhaust air and contain an overhead conveyor to transport finished rock salt product to surface. Twin declines will be extended from the 240 Level to the first production level at 320 Level, continuing deeper into the mine as each new production level gets established. The primary mine-related infrastructure including maintenance shops, vehicle charging bays, and gear storages will be located on the 320 Level.
Internal declines will be developed as necessary to sustain the initial production rate of 2.5 Mtpa over an initial 34-year mine life. A total of seven production levels supported with internal declines and level-specific infrastructure will be constructed to support mining activities on each level. Room and pillar production mining will be executed in four cuts of five meters height, resulting in a maximum room height of 20 m. Rooms will be 16 m wide, separated by 25 m square pillars.
All major equipment used in the mine will be battery electric or plugged electric, with minimal diesel-powered equipment in the mine.
Processing
Processing of the salt will take place at a crushing and screening plant located within the underground mine. The rock salt produced will be suitable for use as a deicing product, conforming to specification ASTM-D632, with a minimum NaCl grade of 95% and certain grading sizes. Excess fines produced during the crushing and screening process will be used within the mine for haulage way surfacing. There are no chemical processes or reagents involved in the production of rock salt, other than an anti-caking agent that is added to the product immediately before shipping. After rock salt has been processed, it will be transported to the surface via conveyor belts. On surface, a series of conveyor belts will transport the rock salt from the mine site to the port.
Infrastructure
The Great Atlantic operation will include both on and off-site infrastructure. On-site infrastructure has been configured to minimize the mine site surface footprint. Components of the on-site infrastructure include:
- Site terrace
- Lined and covered temporary salt storage area used during initial excavations
- Boxcut and decline access area
- Surface buildings such as administration, warehouse, fuel bay, dry facility, maintenance shop
- Salt storage building and associated material handling system
- Electrical substation and distribution
- Surface water management system
- Gatehouse and fencing
Notably, a tailings management facility is not required for the Project, as all material that is processed will be sold as rock salt or remain in the mine as fines.
Off-site infrastructure has been designed to take advantage of some of the existing facilities available in the immediate area, including the port, historical haul road, and a NL Power electrical substation. From PEA to FS, the design of elements for the off-site infrastructure have been improved based on discussions with stakeholders.
Planned off-site infrastructure includes the following:
- Improved site access road alignment overland conveyor connecting the mine to the port
- Retrofitting of the existing port facilities to handle rock salt
- Addition of a new building and material handling system at the port to expand the capacity of covered material storage
- High voltage transmission line connection to NL Power’s substation located in the town
- Sewer and water connection to town utilities
Environment and Community Engagement
Environmental base line studies of the project area have been completed by GEMTEC Consulting Engineers and Scientists Limited (GEMTEC) throughout 2022 in preparation for the registration of the project under the environmental review process. Consultations with local community and affected groups are ongoing. Atlas has retained the services of an experienced communications consultant to assist and facilitate informed community input into the project development. With the FS now concluded, Atlas intends to launch into the formal environmental assessment process.
Marketing and Logistics
As part of the FS, Atlas and SLR have commissioned multiple independent assessments of marketing and logistics. These independent assessments have formed the basis of the assumptions used in the FS.
Rock salt produced from Great Atlantic will initially target the regional deicing markets in eastern Canada and the US East Coast. It is estimated that this market requires between 11.0 Mtpa and 16.0 Mtpa of rock salt in any given year, sourced from domestic and international suppliers, with the demand highly correlated to weather conditions. The primary customers of rock salt are government entities which use a tender system for the annual supply of deicing salt. Secondary customers include commercial deicing operators.
Government entities include municipalities, Departments of Transportation (DoT), counties, and other provincial or state entities, while commercial operators may vary from distribution companies for retail purchase, or contractors who purchase rock salt for de-icing commercial and private properties.
Cash Flow Model Basis
SLR has prepared a cash flow model that is based on a 34-year mine plan with a production rate of 2.5 Mtpa. It is noted that the Mineral Resource base will allow for a much longer mine life. The mine schedule includes a three year ramp up period, with year one production of 1.5 Mtpa, year two production of 2.0 Mtpa, and year three reaching steady-state production of 2.5 Mtpa.
The cash flow model comprises estimates of capital costs, operating costs, an assessment of revenue, and estimate of project economic metrics such as net present value, internal rate of return, and payback period. Economic metrics were assessed both on a pre- and post-tax basis.
SLR has assumed that pre-construction activities commence in 2024, construction of the mine would commence in 2025, with salt production commencing in 2028. To bring salt prices to a 2028 base date, SLR has applied a 4.0% annual increase to the price of salt, which is consistent with other publicly available technical reports on existing salt operations in North America. Beyond 2028, SLR has applied a 2.0% annual increase to the price of salt. In terms of costs, SLR has applied 2.0% annual inflation to capital and operating costs. SLR has also applied a 2% premium to prices every fifth year, to account for volatility in the rock salt markets due to weather events.
Capital Costs
Capital costs for the Project have been estimated based on first principles build ups, factored estimates, and quotes for major equipment and supplies. The capital cost estimate conforms to an AACE Class 3 estimate, as of the third quarter (Q3) of 2023. Capital costs are divided between pre-production capital (representing years leading up to salt production) and sustaining capital. Costs are divided into areas including mining, processing, infrastructure, off-site infrastructure, indirect costs, owner’s costs, and contingency. The capital cost estimate is presented in Table 3.
Table 3: Capital Cost Estimate – Initial 34 Year Production Plan
Notes:
- Capital costs include escalation.
Operating Costs
Operating costs for the Project have been estimated based on first principles build ups, estimations of labour quantities and remuneration, productivity, and consumption assumptions. The operating cost estimate is as of Q3 2023. Operating costs are divided into disciplines including mining, processing, general and administration, and port operations. SLR has assumed that the port would be owned and operated by a third-party and accessible based on commercial terms. The operating cost estimate is presented in Table 4.
Table 4: Operating Cost Estimate
Notes:
2. The columns LOM (life of mine) – Initial 34 Year Plan, and LOM Unit Costs include escalation.
Pricing and Revenue Assumptions
SLR has assumed a weighted average price of rock salt based on a market analysis review completed by a third-party, as well as taking into consideration the shipping and logistics costs of getting the salt to destination ports. SLR’s revenue analysis is based on pricing FOB Turf Point and is based on Q3 2023. The Project is subject to a royalty payable to Vulcan Minerals Inc., in the amount of 3% of net production revenue. A summary of revenue assumptions is presented in Table 5.
Table 5: Summary of Revenue Assumptions
Economic Outcomes
The resulting economics of the Project including net present value (NPV) and internal rate of return (IRR) are presented in Table 6. Results from the January 30 PEA are shown for comparison purposes.
Table 6: Summary of Economic Outcomes – Initial 34 Year Production Plan at 2.5 Mtpa
It is noted that all calculations of NPV and IRR assume an initial capital spending period of four years. The payback period calculations have a base date of the commencement of operations.