News Release
November 13, 2019
Vulcan Minerals Inc. – Salt Project update
St. John’s Newfoundland and Labrador – Vulcan Minerals Inc. (“the Company” – “Vulcan” TSX-V:VUL) announces that its subsidiary company Red Moon Resources Inc. (Red Moon) has provided a market update on the Captain Cook salt project, quoted as follows:
“Red Moon provides, in response to recent market activity, a recap and update on its Captain Cook Salt project in Western Newfoundland. The Company acquired a 100% interest in certain mineral licences covering a portion of the northern Bay St. George Basin in western Newfoundland in August 2012, as a result of a corporate re-organization of Vulcan Minerals Inc. (parent company that owns 63% of the outstanding shares in Red Moon). Vulcan retains a 3% royalty on the lands. The licences included the mineral rights to lands that have potential for salt, gypsum, potash and other mineral deposits. The Company pursued the exploration for salt and potash since 2013 through drilling and the utilization of various geologic and geophysical datasets culminating in the definition of a significant salt resource known as the Captain Cook salt deposit. In January 2016 Apex Geoscience Ltd. of Edmonton, Alberta completed an independent National Instrument 43-101 compliant Mineral Resource Assessment report on the Captain Cook deposit. This is the first mineral resource assessment of the salt deposit. The report concluded that within a larger salt formation containing in excess of 1 billion tonnes of rock salt there is estimated to be an Inferred Resource of 908 million tonnes of high purity rock salt (96.9% salt, using a 95.0% lower base cut-off for sodium chloride which is the common base level specification for road de-icing salt). A copy of the Report is found on SEDAR.COM here_https://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00033480 .
Having answered the geologic question as to whether an adequate salt resource and grade existed, the Company undertook research and analysis to fully understand the implications of having such a salt resource in Atlantic Canada and its prospects for commercial viability. Given the availability of existing port, road, and energy infrastructure at the Captain Cook site the question of viability became one of accessing the salt market. The road de-icing market consists of both a “tendering” market and a “contract” market. These types of markets do present the opportunity for new entrants on a cost competitive basis. Whether a project will be competitive will depend on, amongst other things, access to the salt distribution system (shipping, ports, transportation and storage areas etc) to get the salt to the customer. The Captain Cook deposit does have close access to existing shipping and port infrastructure in western Newfoundland which the Company currently utilizes with its production and shipment of 150,000 tonnes of gypsum in 2019. The location is central to the largest de-icing market in the world with a consumption of up to 40,000,000 tonnes per year. The North American de-icing market is dominated by three large producer- shippers but the market is increasingly being serviced by smaller distributors who are sourcing salt from Africa and other sources. Recent production from mines in the Great Lakes area has been disrupted due to labour, technical and mine integrity issues which has allowed more foreign sources of salt to enter the market. This has also been facilitated by low international bulk carrier shipping rates. As these rates normalize, Captain Cook’s proximity to market will become a greater competitive advantage. As well, more stringent environmental emission standards for commercial shipping are coming into effect which will generally increase shipping costs, again providing an advantage to Captain Cook’s proximity to market.
After significant research and the consideration of many other factors, the Company concluded that the potential for market penetration does exist and that the project requires a feasibility level evaluation to define the most responsible, efficient and cost effective mining method and production process. Because the salt formation is relatively shallow with initial mining possible at depths of 250 to 400 meters, the mine may be accessible by decline ramps instead of vertical shafts which would provide significant capital and operating costs savings. The Company anticipates a budget of $3 million dollars to undertake that evaluation as additional drill holes will be required for geotechnical and resource reasons. This budget may be spent in stages to complete all aspects of the feasibility analysis. As such the Company has been soliciting various financing sources to obtain that funding. The project has been featured at several international salt conferences where a key network of contacts in the industry was generated. Significant progress has been made but that solicitation process continues.
The construction of a salt mine is rare in North America because additional salt demand has been supplied by foreign sources. The Company considers the investment in a new salt mine to be attractive for several reasons. The geologic risks related to proving the existence of the ore are relatively low compared to other typical metal mines. In the case of Captain Cook, salt mines currently produce from similar rock formations in Nova Scotia and the Magdalene Islands in the Gulf of St. Lawrence. A salt mine is essentially an underground quarry. No chemical processing is required and as such there is no resultant toxic tailings. The rock is effectively 100% direct shipping ore and requires only physical extraction, crushing, screening and loading to a ship. As well, salt mining is “recession proof” because highways must be de-iced for safety reasons regardless of economic conditions. Salt mines can stay in production for a very long time (often exceeding 50 years) compared to metal mines and thus can provide long term revenue streams from a commodity that has relative price stability. Salt prices vary depending on a variety of factors, location, time of delivery, supply shortages etc. The United States Geological Survey indicates the value of rock salt to be generally in excess of $ US 50 per ton https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium/production/atoms/files/mcs-2019-salt.pdf Based on the Company’s internal evaluation and given the perceived market opportunity, the Captain Cook deposit has the potential to produce two million tonnes per year. No independent economic evaluation of the project has been prepared. It would be a critical component of the feasibility study.
Given this context, the Company continues to seek funding to carry out a feasibility level evaluation of the Captain Cook project. The evaluation is anticipated to take one year to complete. Because the Company owns 100% of the project, it has complete flexibility in structuring a funding arrangement. A recent story regarding the Captain Cook salt deposit was carried by CBC news at https://www.cbc.ca/news/canada/newfoundland-labrador/newfoundland-salt-company-fish-1.5351249?__vfz=medium%3Dsharebar
Further information regarding Red Moon is available at www.redmoonresources.com .
Further information regarding Vulcan and its projects are available at www.vulcanminerals.ca
Patrick J. Laracy, PGeo, President is the qualified person responsible for the contents of this news release as defined in National Instrument 43-101.
We seek Safe Harbor.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. This release may contain certain forward-looking statements. Actual events or results may differ from the Company’s expectations. Certain risk factors beyond the Company’s control may affect the actual results achieved. Accordingly, readers are advised not to place undue reliance on forward-looking information. Except by law, the Company undertakes no obligation to publicly update or revise forward-looking information.
For information please contact:
Patrick J. Laracy, President
(709) 754-3186