Developing CUMO – the World’s Largest Un-mined Open Pit Rare Earth Mineral Molybdenum Deposit. Mosquito Consolidated is firmly focused on moving its world class, 100% owned CuMo rare earth molybdenum-copper property in Idaho forward on several fronts – defining the deposit over its full extent, optimizing planned operations on what is already a very attractive asset economically, and bring the deposit to the Feasibility Stage.
A 2009 Preliminary Economic Assessment (PEA) shows highly attractive economics. Subsequent exploration has increased the size of the resource (65.3% increase in Silver, 57.0% increase in Copper, 12.9% increase in pounds MoO3).
- The CuMo is world class by any standard, with a clearly economic NI 43-101 compliant resource.
- There is significant room for expansion, with the current resource covering only 60% of the identified mineralized system covered by the property.
- The project has demonstrated highly positive economics,
$10 billion NPV and 29% IRR at a 100,000 tpd throughput, and
$16 billion NPV and 36% IRR at a 150,000 tpd throughput.
The company aims to lower operating costs to under $3/lb (vs. $4.3/lb @ 100kt rate, $3.9/lb @ 150 kt rate – a 25% reduction which would dramatically improve the economics.
- With a current market cap of under $70 million and initial valuation in the billions, what this means is that Mosquito Consolidated is trading at a very high discount.
- The company also has a diverse portfolio of precious and base metals projects in high return, low political risk environments in North America. It is successfully converting these into high value royalty assets – which preserves and increases their values to the company over time while minimizing capital and personnel requirements to move them forward.
- The company is committed to bringing the CuMo deposit to feasibility stage in 2013 and offer future operating partners a project with exceptional, highly accretive economics. The company is demonstrating this ability, showing ease of open pit mining along with no negative environmental profile.
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CuMo Deposit, Idaho
The CUMO deposit is a rare earth mineral molybdenum-copper deposit situated in a historic lode gold camp 37 miles northeast of Boise, Idaho and 15 miles northeast of Idaho City. With recorded production of 2.8 million ounces of gold, molybdenite mineralization was not discoveredin this area until 1963 by Amax Exploration. The property was initially developed by Amoco and AMAX, and there have been two main drilling programs conducted on the property.
Amoco / AMAX drilling 10,980.7 meters (36,025.8’) in 22 diamond drill holes between 1969 and 1982.
Mosquito Consolidated. 20,335.6 meters (66,718’) of drilling in 32 holes between 2006 and 2010.
In 1982, AMAX produced a block model for the project, estimating geological reserves of 1.387 billion tons 0.093% M0S2 at a cut-off grade of 0.05% MoS2. A higher grade core zone of 444 million tons 0.135% MoS2 at a 0.10% cut off was also included in this estimate (note – these estimates are historic and as such in accordance to NI 43-101, sec. 2.4, should be used as an indicator of the potential of the property).
The work by Mosquito Consolidated since 2006 has advanced the property significantly.
- Increased size. A recently released 43-101 resource estimate now pegs resources several times the historical figures.
This deposit is very large by world standards, as shown below.
- Positive Potential Economics. The 2009 Preliminary Economic Assessment described excellent economics, with a net present value of $10 billion at a 100,000 tpd operating rate and $16 billion assuming 150 tpd. Rates of return easily surpass hurdle rates. In addition, with optimization and more detailed work, the company’s goal is to get production costs under $3 /lb MoS2.
As shown below, the CUMO project compares very favorably with other deposits worldwide from a profitability standpoint (i.e. ratio of value : cost).
As shown below, high values and rates of return are indicated at various Molybdenum price levels.
The CuMo deposit compares favorably with other operating mines worldwide, with clear potential to reduce these costs significantly.
Several ways in which operating costs might be reduced (by around 25% overall) have been clearly identified by the company, which would have a dramatic impact on the project.
- Equipment Costs – up to 25% savings for fleet optimization and bulk discount.
- Tailings dam costs – tailings costs used are much higher than peer group.
- Pit Optimization – improvements to haulage costs, strip ratio.
- By-Product prices – conservative prices used for metal by-products.
- Crushing and Milling costs – testing coarser grind for potential 50% cost reduction.
- In-pit/Near-pit crushing and conveying.
- Future drill programs in the known mineralized zone may covert waste blocks to ore blocks (move less rock for same ore tonnage).
- Ease of Mining. CuMo has a configuration that will allow for low cost open-pit mining. The thick mineralization is very continuous and indicates little internal waste and is persistent over a broad area measuring 2 km by 3 km. Mineralization begins at the bedrock surface which is covered by a thin layer of overburden and broken rock ranging from 4 to 20 meters thick. The molybdenum and copper mineralization at CUMO lies in three distinct mineral zones with an oxidized layer on top. More or less from top to bottom there occurs in most drill holes an Oxide Zone, Cu-Ag zone, a Cu-Mo zone and a Mo zone. The deposit is currently 650-850 meters thick and open to the south and west. If further exploration substantiates these overburden characteristics, development would involve an unusually low strip ratio.
Mining infrastructure, power, water, major road and rail networks and a trained mining-industrial workforce are available within 50 miles of the property. The property is also located in one of the poorest counties of Idaho, with Boise County (where the project is located) recently declaring bankruptcy. This project would contribute significantly to the economic base and prosperity of the region.
Environmentally, no serious hurdles are apparent. Preliminary tests indicate tailings are acid neutralizing (non-acid generating), which will result in substantial cost savings and faster permitting. An existing Molybdenum mine located only 60 miles from CUMO has just been recently permitted (Thompson Creek). There has been extensive logging and mining throughout the area and the company has stated that if exploration someday leads to mine development, management intends to carry out substantial restoration work on lands that have been heavily mined in past years by others.
Metallurgically, there no problematic minerals such as pyrite, clay or talc. The flotation mill flow sheet is straight forward, with low reagent consumption and thus low operating cost.
Snapshot of 3D model of CUMO Deposit Showing Concentric Pattern of Metal zones. Yellow is barren silica core, purple is Mo zone, blue Cu-Mo zone, green is Cu-Ag zone.
- Potential For Expansion. Mosquito has substantiated that the 2011 CuMo estimated resource consists of approximately 60% of the identified mineralized system covered by the property. This is consistent with AMAX’s findings in 1981 and is confirmed in the recent resource calculation. A large portion of the 2011 exploratory drill program will be focused on drilling in the areas of the uncalculated blocks and improving the confidence in the resource (note – 2011 proposed drilling sites below).
- Future Program. Mosquito intends to complete a pre-feasibility study by first quarter 2012 and a feasibility study by early 2013. Mosquito also continues to negotiate with several different parties interested in funding the CuMo project through its various stages of development.
Molybdenum (Moly) – A Wonder Metal. Rare Earth Mineral
|Moly Attributes||Ideal for tough environments where heat, pressure and corrosion are factors.
Higher moly content makes steel stronger and lighter.
Higher moly content makes stainless steel more resistant to corrosion.
Due to low-toxicity it is used as catalyst in energy production.
|Moly Applications||Known for its use in production of steel alloys due to its strength, weld-ability, and corrosion resistance. Examples include advanced High Strength Steel (AHSS), super alloy for pipeline steel, corrosion-resistant for off-shore drilling and desalination projects,
Offers increased safety for nuclear power plant construction.
Increased safety and efficiency in auto, ship, aircraft and aerospace manufacture.
A catalyst for removing oil form tar sands and reducing sulfur content of diesel
Uses for Molybdenum, especially in the area of environmental pollution control, are expanding on a yearly basis at a rapid rate.
Agriculture use as fertilizer increasing crop yields up to 30%
|Moly Demand||Expected to increase between 5 – 7% annually during next decade.
Demand forecasted to outstrip supply for several years to come.
Global demand calls for additional 21 million lbs by 2011 rising to 85 million lbs by 2015.
|Moly Pricing||Price forecasted to remain flat during 2009-2010 starting to rise in 2011 with average price forecast at $13 to $15 over next seven years.|
As clearly evidenced by the following chart, the global molybdenum market is entering into a supply deficit. Demand outstrips present supply and this supply shortfall is expected to increase for the foreseeable future.
By-product molybdenum production is being reduced as more SX-EW Copper plants come on line that do not produce Molybdenum. As demand increases the supply shortfall will have to be made up from primary molybdenum producers.
In addition, the global production shortfall could not be met with production from the CuMo deposit and long term Molybdenum pricing fundamentals are very favorable.
Since inception in 1979, Mosquito Consolidated has acquired a portfolio of high-potential properties in low political risk environments of North America and Australia
(January 25, 2011 news release), Mosquito Consolidated has completed agreements on the following projects
- Highly robust project currently based on currently known information – $96 billion dollars of recoverable metal.
- Strong potential for expansion.
- Strong potential for reduced operating costs.
- No serious impediments foreseen from environmental perspective.
- Relative ease of development from straightforward open pit scenario.
- Strong moly fundamentals.
- Project being developed aggressively.
- Strong potential to represent attractive, accretive candidate for strategic development partner.