Clean Air Metals has suffered a major setback in its plans to develop a mine north of Thunder Bay.
The local junior miner reports there's been a miscalculation in the mineral resource estimate of one of its two platinum group metal and copper deposits at its Thunder Bay North Project. And the reduction in the amount of metal in the ground could be in the range of 20 to 50 per cent lower than what was originally reported in 2021.
The company revealed in a Feb. 15 news release of an "over-estimation" of the original mineral resource at its Current deposit, which influenced the outcome of a preliminary economic assessment (PEA) to make a case for a mine at Thunder Bay North, 40 kilometres north of the city.
Clean Air said an internal review is underway and an independent engineering firm, SLR Consulting, is diving into the details on what happened before the mining company can reveal the full extent of the mineral reduction.
Current is the more advanced of two deposits on the 29,725-hectare property. It would be the starting point for an eventual district-scale mine operation with an initial mine life of 10 years. The company has maintained the exploration and mine potential has huge upside.
The PEA released late in 2021 proposed a $367-million ramp-access underground with an on-site 3,600 tonne-per-day mill.
Clean Air said the resource estimate and the PEA "must not be relied upon" and it is retracting both documents, which were prepared by Nordmin Engineering.
Thunder Bay North is Clean Air's only mining asset. The parallel deposits of Current and Escape Lake contain platinum, palladium, copper and nickel with some gold and silver in the mix.
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The discrepancy was spotted by SLR Consulting, hired last summer to provide a new resource update in preparing for a pre-feasibility study of the two deposits.
SLR had been reviewing the large 750-drill hole database from the Current deposit, including more recent infill drilling of the deposit after the PEA was released when it discovered the inaccuracy.
The engineering firm is now reverifying all the information regarding the metal calculation and the deposit model.
There appear to be no issues with the mineral estimate of the nearby Escape Lake deposit from the original Nordmin estimate.
In a statement, Clean Air CEO Abraham Drost called the miscalculation "unexpected and disappointing," adding it "may have a material effect on the projected economics of the Thunder Bay North Project."
The company said it is awaiting a new mineral estimate for both deposits, to be prepared by SLR, before announcing its next steps. No date was given on when that report comes out.
"The company's technical and management team together with its independent consultants are now solely focused on this important work and will update the market on a priority basis," said Drost.
The mine's design will be reconsidered pending the outcome of SLR's report.
Clean Air clearly has some work to do to regain the confidence of the market. Upon release of this news, the company's stock plummeted from 11 cents a share to 4 cents today. In April 2022, the price per share reached 29 cents.