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Moberly Project Update

Heemskirk has commenced the redevelopment of its major silica resource located in Canada.

Project Finance

Heemskirk has entered into a debt facility agreement with Taurus Funds Management to finance the Moberly Project.  The funding package is broken into two tranches:

Tranche 1:  US$25m to complete the 300,000 tonnes per annum (tpa) construction and production development project (Stage One).  Heemskirk has entered into a construction contract with Maple Reinders for Stage One.  Plant commissioning is expected by May 2017, with first production due in June 2017.

Tranche 2: US$15m to complete an expansion of the project (Stage Two) to a 600,000 tpa production level, once Stage One has been completed.  Evaluation of expansion for State Two commenced in March 2016.

The initial C$2.4 million footings stage of construction was completed in May 2015, Heemskirk has entered into a construction contract with Maple Reinders for construction of the stage one Moberly plant construction.  Construction commenced in February 2016 with an estimated build timeline of 14 months.

Project Metrics - Key Assumptions Stage One Development

 

  • Nameplate production output capacity – 300,000 metric tonnes per annum;

  • Recoveries in frac sand product size range - 75%;

  • Capital costs, with contingencies – US$26.9m1;

  • Funding Stage One – US$25m;

  • Customer demand remains strong;

  • API specification frac sand product;

  • Defined in situ JORC Reserve is more than sufficient to satisfy current 20-year mine plan;

  • Appropriate permits in place; and

  • The Project has an estimated terminal value of up to $360 million2 (assuming Stage One construction only).

 

 

[1]  Based on locked-in forward currency heding contracts at a rate of US$/C$ of 1.37.

[2] Depending on valuation method used.

 

The Moberly Project

 

The Moberly plant is located on the Trans-Canada Highway and the Canadian Pacific Rail Mainline near Golden, British Columbia.  It is also within 12 hours trucking to targeted market areas which extend from southern Saskatchewan (Bakken Basin) to northeast British Columbia (Horn River Basin).

 

Frac sand is manufactured from naturally-occurring pure quartz sand via a crushing, grinding and washing process.  Frac sand is used in the oil and gas sectors – chiefly, the unconventional tight gas and shale gas industry.

 

Due to oil and gas demand exceeding supply from conventional reservoirs, attention has shifted in recent years to the exploitation of less permeable basins.  This has been facilitated by the rapid improvement in horizontal drilling and frac technology.  As a result, the demand for frac sand has grown rapidly.

 

The plant design will allow for year round processing of feedstock and the production of a selection of frac sands for the Western Canadian Sedimentary Basin (WCSB) energy projects.

 

Production of 20/40; 30/50; 40/70 and 100 meshproducts may be delivered from the plant by rail or truck.  The plant has a flexible design to adapt to changes in product requirements and utilises energy efficient technology.

 

[3] A description of sand size referring to the number of openings per inch of sieve mesh.

 

Moberly Site Aerial View

 

Construction progress

 

Main process building foundations

 
      
 Cement pour of footings Main process building floor rebar     Main process building form work


 

   Aerial view of Moberly plant construction

                                   
Main process building construction                                                                               Cladding of main process building                         
 


 Aerial view of Moberly mine pit and mine haul road

 

Mine haul road upgrade construction  Completed mine haul road upgrade