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A near-term success story?

Fluorspar is seen as an important future growth area in Mongolia

Reprinted by permission of Industrial Minerals | September 26, 2013

Genghis Khan, the most famous of all Mongolians, is known for creating the world’s largest empire in the 13th century, stretching from Poland in the west, to Korea in the east, and from Siberia in the north to the Gulf of Oman and Vietnam in the south.

Khan, famed for his brutality, should also be recognized for creating the trade route known as the Silk Road, opening the region to trade and information, and providing a passage between Asia and Europe.

Fluorspar is seen as an important future growth area in Mongolia

On site at Delgerkhan, chief geologist Ian Furigay, Prima director
Sean Charland, Prima CEO Robert Bick and Firebird fund manager
James Passin study an historic vein map.

And, as present-day companies have discovered, this trading principle still functions, with Mongolia both encouraging and facilitating foreign investment.

The country’s largest export is copper, followed by apparel, livestock, animal products and cashmere, according to Economy Watch. Its major export partners are China, Canada, UK and Luxembourg.

Fluorspar, although slightly further down the list, is also seen as an important future growth area.

Mongolia produced 420,000 tonnes per annum in 2012, according to the United States Geological Survey (USGS).

It is the third-largest producer in the world, with most of its supply feeding China and Russia.

In fact, insufficient transportation infrastructure means Mongolia’s only markets for fluorspar are these two countries, largely via the Trans-Mongolian Railway, which connects China (at Zamyn-Uud) and Russia (at the Altanbulag port).

While Mongolian production has recently stuttered as global demand has fallen, most market commentators believe that the market will pick up.

Prima-ed for a great deal

Vancouver-based Prima Fluorspar TSXV:PF signed a letter of intent (LOI) in September with New York fund Firebird Management, which holds a 99.8% majority stake in Berkh Uul JSC, owners of the Delgerkhan fluorspar mine.

The acquisition of the Delgerkhan mine [would position] Prima to become a major global fluorspar producer and supplier.—Robert Bick,
CEO of Prima Fluorspar

“The acquisition of the Delgerkhan mine [would position] Prima to become a major global fluorspar producer and supplier,” CEO Robert Bick told Industrial Minerals.

[The project holds an historic, non-43-101 resource of 6.62 million tonnes averaging 33.7% calcium fluoride (CaF2) indicated and 3.02 million tonnes averaging 33% inferred.]

The Delgerkhan fluorspar mine has an interesting history, having worked as a fluorspar mine since the 1950s, with approximately 90,000 metres drilled in the period between 1950 to 2000.

“Delgerkhan is one of the largest in the world,” James Passin, fund manager at Firebird, told IM. Passin has been developing the mine since 2011.

“We have been working on drilling the deposit to produce an NI 43-101-compliant resource. There is fluorspar that we would intend to produce through an open-cast mine. The rest of the deposit will be produced by underground mining by rehabilitating the existing shafts,” he told IM.

Historically, the mine produced metallurgical-grade fluorspar (metspar), but Firebird believes “there’s potential to build a flotation plant and produce acid grade as well as metspar.”

The next steps for the project are to dewater and remediate the existing mine infrastructure, with a target date of Q4 2014 for first production, at a run rate of 120,000 tpa.

Mongolia Minerals Corp

Mongolia Minerals Corp is developing its Dai Uul project in the Dornogovi province. The project is not as advanced as Firebird’s, but it recently increased its reserve estimation. [Mongolian reserves don’t correspond with NI 43-101 resources or reserves.]

The company underwent an extensive drilling campaign in 2012 to enlarge the existing reserve base, and is working towards establishing [an Australian] JORC-compliant resource.

“It bears noting that under the Mongolian reserve code, to be included in reserve calculations, reserve blocks need to have an average grade of 25% CaF2 or above, which is higher than typical international norms,” James Rodriguez de Castro, managing director, told IM.

Testwork is currently underway to explore the possibility of recovering additional fluorspar by including lower-grade ore into the economically exploitable reserves through pre-concentration.

Lower costs

Both Passin and Rodriguez de Castro agree that developing a project in Mongolia has cost advantages.

“We have a huge cost advantage on the existing infrastructure and mining assets, which will allow us to get to production without having to invest a lot of capital, compared to a lot of other large fluorspar deposits,” Passin said.

Reprinted by permission of Industrial Minerals.

Disclaimer: Prima Fluorspar Corp is a client of OnPage Media Corp, the publisher of The principals of OnPage Media may hold shares in Prima Fluorspar.

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