I-minerals / Industrial Minerals (IMA.v)

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I-Minerals Update

 

I would like to take this opportunity to update you on i-minerals and developments related to the Helmer-Bovill property. As noted below, we have finally secured a Surface Lease to locate the mill facility and store tailings allowing the feasibility study and permitting process to resume with a sense of urgency to try and recapture some lost time. Phase 1 drilling on the WBL area deposits has just completed with core being logged and sampled for analysis.

 

As noted in the press release of June 16, we have secured a surface lease covering the ground upon which we intend to build the mill facility and store tailings on June 15. This took longer than anticipated, but the site has attributes that would be costly to replace on an alternate site:

 

1. Electricity for industrial level applications is within about 500 meters of the surfaces lease grounds

2. Natural gas is within 500 metres of the surface lease grounds

3. Only about a 500 meter section of road needs to be upgraded to access to state highways.

 

Alternate sites would have increased the capital costs through having to re-route the natural gas and electricity several kilometers and operating costs would be slightly impacted as a the road from the mill to the state highway has to be maintained at levels adequate for highway transport trucks (as opposed to the off-road trucks than haul the ore). This is by far the best location for the mill, but proved more difficult and less timely to acquire rights to the site then ever anticipated. As noted in my email of June 29, the delays in securing the surface lease have us behind schedule.

 

On June 23 we had a meeting in SRK’s Denver offices attended by company staff and the engineering contractors responsible for various aspects of the feasibility study and permitting. The key outstanding item to resolve is the optimization of the diversion of an intermittent creek that currently runs through the ore body that in turn will allow for the completion of the Mine Plan. We have an initial proposal from TetraTech to divert the creek. We believe this proposal would be acceptable to the EPA and Army Corp. of Engineers, but the settling ponds associated with this diversion plan would reduce the ore body by up to 20% reducing the resource to about 25 years of production. While the reproduction quality is poor, the diagram attached outlines the currently proposed diversion of the creek in blue. With the creek (when it runs) travels from the north to the south, the settling ponds would need to be placed near the south east corner of the open pit and encroach on portions of the pit. SRK and TetraTech are working on an alternate proposal that employs culverts as opposed to open drainages with the expectation they can reduce some of the ore loss. Once this issue is resolved the mine plan is complete and all input factors are at pre-feasibility level. On SRK’s recommendation we will complete a prefeasibility study as an interim step to the completion of the feasibility study. In addition to the completion of the Mine plan, there are four key steps to move the prefeasibility study to a full feasibility

 

1. Geotechnical drilling and related analysis in the areas outlined for tailings storage to determine the porosity of the underlying rock / clay to determine whether the tailings storage need to be lined (drilling ongoing, TetraTech to compile)

2. Completion of detailed engineering of mill facility (ongoing by Robertson Schaeffer, blue print level engineering beyond feasibility levels)

3. Confirmation of capital and operating cost estimates ( ongoing SRK and i-minerals)

4. Letters expressing commercial interest in mineral products from prospective customers (ongoing i-minerals)

 

Assuming the timely resolution of the creek diversion and therefore the mine plan, one might normally expect the prefeasibility study to be completed about 6 weeks from today. However, some of the engineering contractors have summer vacation plans, we expect to have the pre-feasibility study on the Kelly’s Basin deposit in about 8 weeks or on or about September 1. On the marketing front our products are being very well received. We have interest in our quartz products about 6 or 8 times greater than forecast production. This should enable us to focus on the highest value products. To this end we made strong inroads with flat panel TV and monitor manufacturers including presentations at their head offices at their request.

 

With respect to the WBL Area deposits, we completed the 2010 phase 1 drilling on Friday June 25 (just prior to shifting the drill over to do the geotechnical drilling). The core is currently being split and logged. Our Exploration Manager Lamar Long believes we have sufficient intercepts of primary clay to calculate an inferred resource and in the immediate area of historic mining we may have sufficient information to calculate an indicated resource. Gary Nelson, our metallurgical engineer has done preliminary estimations of capital and operating costs for mining the primary clay. Our intention is to complete a Preliminary Economic Analysis (PEA) on the WBL Area deposits as we believe there is significant value to the primary clay deposits that is not being reflected in our current share price. To complete the PEA we will need to get the assays from the current drill program, calculate the resource(s) once received, complete additional metallurgical work on a composite sample to firm up the estimated kaolin, halloysite, quartz and k-spar content and incorporate all of the above into the economic analysis. While there are many factors that could impact the timelines for the completion of the PEA, we believe we can complete the Preliminary Economic Analysis of the WBL Area deposits at some point in October.

 

I appreciate this update probably only answers a few of your questions. I have no contact information for you beyond your email address, so please email me at any time with any questions or comments you might have. Alternatively if you would like to speak in person, please advise what is the best number to reach you at and I will attempt to contact you at a mutually acceptable time given the time difference. Thank you for your time.

 

Sincerely

Barry Girling