Foran Mining

Exploring and Developing VMS Copper-Zinc Deposits in Saskatchewan

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Overview

Foran Mining Corporation (TSXV:FOM) is a Canadian exploration and development company with zinc and copper projects in the Hanson Lake volcanogenic massive sulphide (VMS) district in mining-friendly Saskatchewan. According to the Fraser Institute’s Annual Survey of Mining for 2017, Saskatchewan was named the top mining jurisdiction in Canada and second globally. An emerging zinc-copper base metal district, the Hanson Lake area displays similar geological characteristics to those found in the better-known Flin Flon and Snow Lake regions.

Zinc and copper have experienced increased demand from the rapidly growing automobile and electronics industries. These base metals are both anti-corrosive, which makes them ideal for a variety of materials, such as electrical wiring and galvanizing. The supplies of zinc and copper are becoming limited due to the demand for both materials, which are used in electric vehicles, renewable energy sources and related infrastructure, along with continuing issues in top zinc and copper producing jurisdictions such as China and Indonesia, as noted below.

Zinc’s depleted supply is due in part to China’s green initiatives and crackdown on mining practices that commenced in 2006. In August 2017, environmental inspectors in eight Chinese provinces  shut down or suspended over 26 mines, and more than 11% of China’s mined zinc output was lost. Meanwhile, the copper supply chain is also facing challenges as Freeport-McMoRan Inc. (NYSE:FCX) recently announced that production at its Indonesian Grasberg mine would be more than halved next year as it transitions to underground operations. This will cut approximately 300,000 tonnes from the world’s supply, potentially speeding up an expected deficit.

Foran’s properties are located west of Flin Flon, Manitoba in mining-friendly Saskatchewan. Its flagship McIlvenna Bay deposit boasts a 2013 mineral resource with an indicated resource of 13.9 million tonnes grading 1.96% copper equivalent and 13.19% zinc equivalent and an inferred resource of 11.3 million tonnes grading 2.01% copper equivalent and 13.52% zinc equivalent.

Foran completed a preliminary economic assessment (PEA) on McIlvenna Bay in 2014. The PEA concluded that McIlvenna Bay could generate an after-tax NPV7% of $263 million and an after-tax internal rate of return (IRR) of 19%. Under this scenario, the company expects the mine to pay back its initial capital cost of $249 million in 4.1 years and projects a mine life of 14 years. The company is working towards completing an updated mineral resource for the deposit in the fall of 2018 and expects to complete a feasibility study in mid-2019, in cooperation with Glencore Canada Corporation.

In addition to the McIlvenna Bay deposit, a large geophysical anomaly has been discovered on the McIlvenna Bay claim area.  Target A is located approximately 2 kilometres southeast of the McIlvenna Bay deposit.  Drilling has intersected the upper edge of the modelled conductor plate.  Borehole electromagnetic surveys indicate a strong off-hole conductor at a downhole depth of 1200 metres.  This anomaly remains a high priority target for Foran.

Foran’s Bigstone property also hosts a historic mineral resource that was completed by Cameco Corp. (TSX:CCO) in 1990. The resource outlines an estimated 3.75 million tonnes grading 2.03% copper and 0.33 g/t silver and an additional 0.53 million tonnes grading 9.62% zinc and 15.9 g/t silver in zinc-rich massive sulphides. Foran is not treating the historic resource as NI 43-101 compliant.

Foran’s third exploration property, Balsam, has seen numerous work programs by a variety of operators, but the biggest find on the property to date was the discovery of the Thunder Zone in 2013. Additional drilling in winter 2015 stepped out from the original discovery hole and cut thick intercepts of copper- and zinc-rich VMS mineralization in four of the five holes drilled, confirming a significant new blind discovery close to the McIlvenna Bay deposit. A notable intercept of 5.0% copper, 2.1 percent zinc, 0.84 g/t gold and 41 g/t silver over 2.6 metres within 12 metres of sulphide rich mineralization was encountered during the 2015 program. The strike remains open and further testing is needed to determine the extent of the mineralization.

Finally, Foran’s fourth property is Hanson. The Hanson property has a number of potential exploration targets that require further work. Currently, the company is in the process of reinterpreting the results of their 2011 VTEM survey with the goal of generating new drill targets.

Major shareholder Pierre Lassonde, Chairman of Franco-Nevada, holds 11.5% of Foran’s issued and outstanding shares. Mr. Lassonde has held various roles in senior management for companies such as Newmont Mining Corporation (NYSE:NEM), Euro-Nevada Mining Corporation Ltd. and New Gold Inc. (TSX:NGD). He was inducted into the Canadian Mining Hall of Fame in 2013. In addition to Mr. Lassonde’s stake in the company, Foran’s management team notably holds approximately 16% of the company’s shares.

Company Highlights

  • Projects are located in Saskatchewan, the Fraser Institute’s top ranked mining jurisdiction in Canada.
  • Foran ground overlies known VMS deposits and occurrences with similar characteristics to those found in Flin Flon and Snow Lake, Manitoba.
  • McIlvenna Bay deposit hosts an indicated resource of 13.9 million tonnes grading 1.96% copper equivalent and 13.19% zinc equivalent and an inferred resource of 11.3 million tonnes grading 2.01% copper equivalent and 13.52% zinc equivalent.
  • McIlvenna Bay’s PEA reported an after-tax NPV7% of $263 million; an after-tax IRR of 19%; and an initial capital cost of $249 million, including a 20% contingency.
  • Updated mineral resource estimate and feasibility study for McIlvenna Bay being prepared in cooperation with Glencore Canada Corporation.
  • Bigstone historic mineral resource is an estimated 3.75 million tonnes grading 2.03% copper and 0.33 g/t silver and an additional 0.53 million tonnes grading 9.62% zinc and 15.9 g/t silver.
  • Exploration opportunities at Balsam and Hanson Lake properties, particularly the Thunder Zone and Target A prospects.
  • Canadian Mining Hall of Fame inductee Pierre Lassonde holds 11.5% of Foran’s issued and outstanding shares.
  • Foran’s management team owns approximately 16% of the company’s shares.

VMS Deposits

VMS deposits are base metal-rich mineral deposits that can contain significant amounts of precious metals. Their ores can be major sources of zinc, copper and lead, with gold and silver byproducts. These deposits are found worldwide in clusters or camps and consist of massive and/or semi-massive accumulations of sulphide minerals, which form in lens-like or tabular bodies parallel to the stratigraphy or bedding. The deposits are typically associated with volcanic and/or sedimentary rocks, which form on or below the ocean floor.

There are five types of VMS deposits based on a variety of criteria set out by Barrie and Hannington (1999) and Franklin et al. (2005): bimodal-mafic, mafic associated, mafic-siliciclastic, felsic-siliciclastic, and bimodal-felsic. Foran’s McIlvenna Bay is a bimodal-felsic VMS deposit.

Canada is home to several clusters of VMS deposits, including those located at the Flin Flon and Snow Lake, Bathurst and Noranda camps. These deposits generally contain high grades and can produce between five to 20 million tonnes of ore. The largest VMS deposits in Canada include the Flin Flon mine, which produced 62 million tonnes and the Kidd Creek and Bathurst Number 12 mines, which each produced over 100 million tonnes of ore.

McIlvenna Bay

In November 2010, Foran’s then newly established management team increased the Company’s ownership interest in the McIlvenna Bay deposit to 100% by purchasing the remaining 25% interest from Copper Reef Mining Corporation (CSE:CZC).

The 20,907-hectare property is located approximately 65 kilometres west of Flin Flon, Manitoba. The McIlvenna Bay deposit and Foran’s exploration camp are accessible by road, and power lines run the length of the Hanson Lake gravel roadand pass over the deposit. Flin Flon is home to approximately 5,600 people and is the largest commercial and residential center in the region. The town is accessible by the Hudson Bay rail line and has regular commercial flights to Winnipeg.

Exploration

In 1988, Saskatchewan Mining Development Corporation (SMDC) (now Cameco Corporation) and Esso Minerals discovered the McIlvenna Bay deposit while following up on a survey that outlined a 1.2-kilometre long anomaly south of Hanson Lake.

In 1991, Cameco suspended exploration at McIlvenna Bay and the property remained dormant until optioned by Foran in 1998. Since then, Foran has completed several drill programs between 1998 and 2000 and then again between 2011 and 2014.  Further exploration drill testing has taken place in conjunction with the 2018 feasibility drill programs.

Target A

In 2013, Foran completed a ground-based TDEM survey over the property and uncovered a large geophysical anomaly located approximately two kilometrees southeast of the McIlvenna Bay deposit. The next year, Foran completed a two-hole initial drill test on the anomaly. One hole had to be abandoned due to excessive flattening but the second hole reached a depth of 1,683 metres. Foran conducted additional electromagnetic surveying and results indicate that there is a large conductor below the trace of the second hole at a depth of approximately 1,200 metres.

Target A is located under muskeg and is thus best accessed during the winter season, when the ground is frozen. Foran drilled another hole at Target A in 2017 but the hole had to be suspended due to the early onset of spring breakup, just shy of its target.  This hole was deepened during the winter 2018 drill program and intersected the upper edge of the modelled conductor plate.

This area remains a high priority drilling target for Foran. A borehole EM survey and directional drilling are planned for Target A in upcoming work programs.

2013 Mineral Resource Estimate

In January 2013, Foran completed a mineral resource estimate for the McIlvenna Bay deposit. The report outlined an indicated resource of 13.9 million tonnes grading 1.96% copper equivalent and 13.19% zinc equivalent and an inferred resource of 11.3 million tonnes grading 2.01% copper equivalent and 13.52% zinc equivalent.

 

Preliminary Economic Assessment

In November 2014, Foran completed a PEA for McIlvenna Bay. Highlights of the PEA include:

  • After-tax NPV7% of $263 million.
  • After-tax IRR of 19%.
  • Pay back of 4.1 years and a mine life of 14 years.
  • Initial capital cost of $249 million, including a 20% contingency.

The PEA outlined a throughput rate of 5,000 tonnes per day as an underground operation. There is also the potential to be expanded with additional exploration. It was also recommended in the report that a stand-alone concentrator should be constructed adjacent to the mine.

Moving forward

Foran is currently working on updating the 2013 resource estimate for the McIlvenna Bay deposit. Towards that end, over 23,000 metres of in-fill and definition drilling will be completed during 2018, which will be incorporated into the revised resource estimate.  The company is also working towards completing a feasibility study for the property mid-2019 in cooperation with Glencore Canada Corporation.

Bigstone

The 16,117-hectare Bigstone property is located approximately 85 kilometres west of Flin Flon, Manitoba and 25 kilometres west of the McIlvenna Bay deposit. The property is accessible by provincial highway and transmission lines cross the northern end of the property. The Bigstone deposit, which is located on the southern end of the Bigstone property, is accessible by helicopter, boat or winter roadmetre and is accessible in the winter from the Hanson Lake property via gravel roads, Highway 106 and winter roads.

Exploration

In 1963, a Selco airborne geophysical survey identified the electromagnetic conductor associated with the Bigstone deposit, which was ultimately discovered by the Granges and SMDC joint venture in 1982. The joint venture continued to explore the Bigstone VMS deposit and regional targets on the property until 1994.

In 1995, Aur Resources Ltd. purchased Granges’ interest in the property and was able to complete several exploration programs until the project was shelved in 2002.

In 2003, Foran purchased Aur’s interest in the project. Subsequently, Foran commissioned a high-resolution VTEM airborne survey over portions of the property in 2007 and then followed up with an additional survey in 2011 to cover the entire property. The two datasets were merged and reinterpreted to identify exploration targets for upcoming work programs.

After purchasing Cameco’s remaining interest and becoming 100% owner of the property in early in 2012, Foran drilled 1,176 metres to test three north-south oriented VTEM conductor trends in the Freeport zone which is located in the northern part of the property. Foran encountered mineralization in three of the four holes, as well as grades of 0.40% zinc, 0.09% copper, 2.9 g/t silver and 130 ppb gold in one of the samples taken.

In 2014, Foran conducted a ground EM geophysical survey over the Bigstone deposit area to further delineate the conductor associated with the historic deposit and other nearby conductors along trend to the north.

During the 2015 winter work program, Foran completed 2,545 metres of drilling at the Bigstone deposit to test the deposit area, confirm historical results from previous drilling and collect samples for metallurgical testing. The Bigstone deposit was known to be a vertically oriented and flattened cylindrically shaped body and the 2015 drilling appears to confirm the historic work. The resource area was drill-tested between 100 and 700 metres below surface. Highlights from the winter 2015 drill program include 2% copper over 105 metres in Hole BS-15-239 and 27% zinc over 7.6 metres in Hole BS-15-240.

Mineral Resource

In 1990, Cameco completed a historic mineral resource at the Bigstone deposit that delineated two zones of mineralization (Main Zone and Zn-rich Massive Sulphides). Using a 1% copper cut-off at the Main Zone, there is an estimated 3.75 million tonnes grading 2.03% copper and 0.33 g/t silver. Using a 5% zinc cutoff for the Zn-rich Massive Sulphides, there is an additional estimated 0.53 million tonnes grading 9.62% zinc and 15.9 g/t silver in zinc-rich massive sulphides.  Foran is not treating this historic estimate as NI 43-101 compliant.

Balsam

The 4,066-hectare Balsam property is wholly owned by Foran and is located approximately 65 kilometres west of Flin Flon, Manitoba. The property’s Thunder Zone discovery is approximately seven kilometres southeast of the McIlvenna Bay deposit and is accessible by winter road from the McIlvenna Bay deposit.

Exploration

Since the mid-1980s, the Balsam property has been subjected to various exploration campaigns by numerous operators. These programs have included geophysical testing, drilling and drill core lithogeochemistry. The programs have identified several horizons of VMS-style alteration and copper and zinc mineralization over a three-kilometre strike length.

Between 1981 and 1987, joint venture partners Granges and Troymin completed airborne INPUT surveys, ground HLEM and magnetometer surveys and 26 diamond drill holes which resulted in the discovery of the Balsam Zone in 1986. The zones returned grades of up to 3.19% copper, 3.3% zinc, 3.6 g/t gold and 52.48 g/t silver.

In 1989, Cameco optioned the property and completed more magnetic and EM surveys as well as 10 drill holes between 1990 and 1991. The ground EM conductors northwest of the Balsam Zone were tested at this time and would later point towards the discovery of the Thunder Zone.

In 1995, Aur Resources purchased Granges’ interest in the property and completed several exploration programs that identified several additional mineralized horizons between 1996 and 2002. In the late 1990s, Aur completed a mineral resource for the Balsam Zone.

In 2013, Foran completed a ground EM survey that covered the seven kilometre trend from McIlvenna Bay to Balsam and completed drilling that targeted new EM conductors and known zones of mineralization. This program resulted in the expansion of the Balsam and B2 zones and uncovered a significant intersection of copper rich massive sulphides at the Thunder Zone.

In 2015, follow up drilling and downhole TDEM surveys confirmed and expanded the Thunder Zone. The zone remains open to the northwest and expansion is possible with additional drilling.

Thunder Zone

In 2013, Foran discovered the Thunder Zone through a work program that consisted of drilling and ground-based deep penetrating electromagnetic geophysics. Foran intersected 3.7 metres of massive sulphide that graded 4.1% copper and 0.43 g/t gold.

In 2015, winter drilling recovered thick intercepts of copper- and zinc-rich VMS mineralization and confirmed Thunder Zone as a significant new discovery close to the McIlvenna Bay deposit. Drill highlights from 2015 include 5% copper, 2.1% zinc, 0.84 g/t gold and 41 g/t silver over 2.6 metres within a 12 m thick sulphide-rich interval in Hole BA-15-80.  Copper and zinc rich mineralization was encountered in four of the five drill holes during this drill program.

Drilling at the Thunder Zone indicates that the massive sulphides strike northwest. The zone is currently open along strike and more drilling is needed to test the extent of the deposit.

Hanson

In January 2005, Foran entered into a definitive agreement with Cameco Corporation and Billiton Metals Canada Inc. to acquire a 100% interest in the 2,565 hectare Hanson property in northeastern Saskatchewan. The project is approximately 65 kilometres west of Flin Flon and immediately south of the McIlvenna Bay project.

From past exploration, there have been a number of potential targets outlined on the property. In 2007, Foran completed a VTEM survey over the Hanson property. The results from this survey are currently being reinterpreted to help generate drill targets for future work programs.

In October 2014, Foran completed an agreement with Teck, which extinguished the back-in rights held by Teck on Foran’s Bigstone, Balsam and Hanson properties.

Management

Darren Morcombe — Executive Chairman

Darren Morcombe joined Foran in mid-2010 and was appointed Chairman shortly thereafter. Mr. Morcombe has more than 20 years of international experience in a variety of roles in in the natural resource sector. This includes over 10 years in senior roles with Normandy Mining and Newmont Mining Corporation in the areas of financing, treasury, mergers and acquisitions.

Mr. Morcombe is the founder of Springtide Capital Pty. Ltd., a private investment company specializing in micro-cap listed companies, venture capital and resource-oriented companies. He was Chairman and a major shareholder of European Gold Refineries SA, Europe’s largest gold refinery, and Director of AGR Matthey, one of the world’s largest gold refineries. He retired from this position in 2008 and these businesses are now owned by Newmont Mining Corporation. Mr. Morcombe is a major shareholder of several public companies.

Patrick Soares, B.Sc (Hons), P.Geo. — President, CEO & Director

Patrick Soares was appointed President and CEO of Foran Mining Corporation and a member of the Board of Directors in November 2010. Previously, he served as the President and CEO of Brett Resources Inc., which was acquired by Osisko Mining Corp. in May 2010.

Mr. Soares holds a B.Sc. (Hons.) from the University of British Columbia and is a Professional Geoscientist with APEGBC. He began his professional career in 1983 as an exploration and mine geologist in northern Canada. Subsequently, he worked in the field of investor relations and corporate development, and held positions with Sutton Resources Ltd. (acquired by Barrick Gold in 1999), EuroZinc Mining Corp. (now part of Lundin Mining Corporation) and Aurizon Mines Ltd. (which put the Casa Berardi mine into production). Mr. Soares was the Chairman of SnipGold Corp. (acquired by Seabridge Gold in June 2016).

Tim Thiessen, B.Comm., CA — CFO & Corporate Secretary

Tim Thiessen has over 20 years of international experience in public accounting and the mining industry. Previously, he was CFO of Aurcana Corporation, a TSXV-listed mining company with silver-copper-zinc operations in Mexico and a silver development project in Texas. In this role he oversaw the accounting and finance departments and played a key role in growing Aurcana’s market capitalization. Previously, he was domiciled in the Cayman Islands as VP of Finance for TSX-listed Endeavour Financial Ltd., an advisory firm in the mining industry. He has also held positions as controller for Endeavour Mining Capital Corp., corporate accountant for several offshore subsidiaries of Silver Wheaton Corp. and as an auditor for Deloitte LLP with a focus in the mining and financial services industries.

Mr. Thiessen is a graduate of the University of Manitoba and is a member of the Canadian Institute of Chartered Accountants.

Roger March, B.Sc. (Hons.), P.Geo. — VP Exploration

Roger March has over 25 years of progressive exploration and project management experience, focused mainly on the design, implementation and supervision of advanced exploration programs. In his prior role as Senior Project Geologist at Cumberland Resources, he spent 11 years as part of the team responsible for the completion of pre-feasibility and feasibility level studies for the Meadowbank Gold Project, including resource increases from 0.8 million to over 4 million ounces of gold. He has multi-commodity exploration experience and has held positions with Inco, Redfern Resources, Lac Minerals and the Newfoundland and Labrador Department of Mines and Energy.

Mr. March has extensive experience integrating exploration with geotechnical, metallurgical and environmental programs for project development and is using this background to advance the exploration and development of the McIlvenna Bay Project.

Mr. March is also a Professional Geoscientist with the PEGNL and holds a B.Sc. (Hons.) from Memorial University.

Marian (Mike) Koziol, B.Sc., P.Geo., P.Eng. — Technical Consultant

Marian Koziol was appointed as a Technical Consultant to Foran Mining Corporation in February, 2013. He is an experienced and highly successful geologist, with over 30 years in the mining and exploration industry and has been responsible for a number of Canadian base and precious metal discoveries, including the McIlvenna Bay deposit.

Mr. Koziol is a graduate of McGill University and is a member of the APGO and the APEO.

Mr. Koziol has also served as the President and a Director of Alto Ventures Ltd. since 2004. Previously, he held technical positions with the Saskatchewan Mining Development Corporation and subsequently Cameco Gold Inc. from 1978 to 2002.

Sharon Dowdall, B.A. (Hons.), LL.B. — Director

Ms. Sharon Dowdall joined the Board of Directors in 2011 and has over 30 years’ experience in the legal field, including experience as a practicing lawyer and as a senior executive in the resource sector.

Ms. Dowdall is a consultant to Franco-Nevada, working on Special Projects. Previously, she was the Chief Legal Officer and Corporate Secretary of Franco-Nevada Corporation, and prior to the IPO of Franco-Nevada, she had a 20 year association with the royalty portfolio assets of Franco-Nevada, including serving as an Officer of Newmont Capital from 2002 to 2007.

Ms. Dowdall holds a B.A. (Hons.) from the University of Calgary and an LL.B, from Osgoode Hall at York University. She was the recipient of the 2011 Canadian General Counsel Award for Business Achievement and currently sits on the Boards of NovaGold Resources Inc. and Olivut Resources Ltd.

Maurice Tagami, BA.Sc., P.Eng. — Director

Maurice Tagami joined the Board of Directors in 2011 and has over 30 years’ experience in mining development and operations. He holds a degree in Metallurgical Engineering from the University of British Columbia and is a Professional Engineer with APEGBC. During his career, he has played a significant role in the metallurgical and project management of numerous open pit, underground and heap leach projects worldwide.

Mr. Tagami is Vice President, Mining Operations at TSX-listed Wheaton Precious Metals, the largest metals streaming company in the world. Previously, he held the positions of President and CEO, with Keegan Resources Inc. and Senior Project Manager (Onca Puma Project) with Canico Resource Corp., which was acquired by CVRD in 2005. Mr. Tagami has served on the Board of Brett Resources Inc. (acquired by Osisko Mining Corp. in 2010) and currently sits on the Board of Maple Gold Mines Ltd.

David M. Petroff, B.Math., MBA — Director

David Petroff joined the Board of Directors in 2012 and has over 30 years’ experience in the mining and investment industry, including holding senior management and financial positions with several prominent, publicly-traded mining companies and working in Investment Banking with a major Canadian investment dealer.

Mr. Petroff was previously President, CEO and a Director of Jaguar Mining Inc. From early 2009 until its acquisition by Nyrstar NV in mid-2011, he was President, CEO and a Director of zinc producer Breakwater Resources Ltd. Mr. Petroff holds a B. Math from the University of Waterloo and an MBA from the Schulich School of Business. He also sits on the Board of Pancontinental Gold Corporation.


 

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