EDITOR: | May 5th, 2015

Canadian Metals – And Now for Something Totally Different

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They say that there is nothing new under the sun. In the mining space most metals have been cycled through by some producer or another. As we have written in recent weeks, even such off-the-radar metals as Scandium have their day in the sun. At some time back in the dim dark past there might have been another Ferrosilicon prospect on the TSX or the old VSE, but we don’t recall one. In an age when the “same old, same old” has lost currency the appearance of Canadian Metals Inc. (CSE:CME) with a plan to step up ferrosilicon production in Canada certainly rates as novel. I have put together a backgrounder on the product and the company to help shed some light on this subject.

Ferrosilicon

You won’t find Ferrosilicon in your copy of the Periodic Table of Elements as it is a ferroalloy. This alloy of iron and silicon has an average silicon content ranging between 15% and 90% (by weight).

It is produced by reduction of silica or sand with coke in the presence of iron. Ferrosilicons with silicon content up to about 15% are made in blast furnaces lined with acid fire bricks. Ferrosilicons with higher silicon content are made in electric arc furnaces. The melting point and density of ferrosilicon depends on its silicon content. The usual formulations on the market are ferrosilicons with 15%, 45%, 75%, and 90% silicon. The remainder is iron, with about 2% consisting of other elements like aluminium and calcium. Microsilica is a useful byproduct of this process which is used in pozzolanic cement.

In contact with water, ferrosilicon may slowly produce hydrogen. The reaction, which is accelerated in the presence of base, is used for hydrogen production.

The Langis Project

The main project of Canadian Metals is its 100%-owned Langis Silica deposit located in the eastern Matapedia Region of Quebec, near the towns of Amqui and Matane, in Appalachian terrain.

langis_map

The Langis property covers a geologically-mapped area of highly siliceous sandstone of economic interest as a potential source of silica sand for an, as yet, undetermined market. It is the site of a small non-operating sandstone quarry that was explored and operated briefly during the 1980’s.

langis_cliff

The deposit has been actively explored by CME for a couple of years now. A broad area of highly siliceous sandstone has been outlined by government mapping and by the existing quarry and the recent drilling completed in September, 2013. Core lengths from three of the drill holes, as well as selected sandstone blocks from the quarry, were sampled and sent for geochemical and physical analyses in order to characterize the sandstone and, as a result, to test for potential economic value.

Geological mapping and historic exploration drilling have outlined a large lobe of highly siliceous Lower White Sandstone. Historical exploration drilling and attendant historical geochemical and physical analyses indicate the potential for an economic silica sand deposit of significant size within this lobe.

Historic Resource & Met Tests

The only resource estimates for the property at this time are historic ones that predates the NI43-101 regime. The older of the estimates shows total historic tonnage of 27.6mn tonnes at average grades of 0.11% Fe2O3 and 0.41% Al2O3 was calculated and published in 1983. There is no mention of the SiO2 grade. This was classified as an Indicated Reserve. The iron ore grade is nothing that one would get out of bed for. As far as can be deduced these early exploration efforts were directed at stone quarrying potential.

In 1985, Pierre Labrecque working for Uniquartz Inc., revised the Langis Deposit Indicated Resource to 25.mn tonnes at average grades of 0.12% Fe2O3 and 0.41% Al2O3. Again there was no mention of SiO2 grade, but the numbers essentially verify the first finding as far as grade is concerned.

Based on the preliminary test work by CTMP laboratory in recent times, the basic properties of the Langis sandstone indicates it has potential to be a usable source of silica. The impurities contained in the core samples are about 1% with a silica grade in the order of 98.55% SiO2.

Next Steps

As the mining (quarrying really) of the silicon is rather a no-brainer the key to success is going to be in the processing. Several months back the company announced an agreement with the South African company, MINTEK, for performing the prototype testing of the production of ferrosilicon from Langis silica sand. This test work will be conducted in two phases. The aim of the first phase is to demonstrate the proof-of-concept and the technical feasibility of producing ferrosilicon from the quartzite, to evaluate the quality of ferrosilicon which can be produced and to provide indicative operational and metallurgical data which can be used for scale-up to a semi-commercial scale. During the second phase, the previous results and performances will be used, in part, to conduct a PEA study on a commercial facility. The study will include a generalized flow sheet of the commercial plant, overall mass and energy balances, and capital and operating costs estimates of within 25-30% accuracy.

Usage

Ferrosilicon is used as a source of silicon to reduce metals from their oxides and to deoxidize steel and other ferrous alloys. This prevents the loss of carbon from the molten steel. However, in this function ferrosilicon is not unique for ferromanganese, spiegeleisen, silicides of calcium, and many other materials are used for the same purpose. The ideal meting points (1210° Celsius) are achieved with between 20%-50% mix in the ferroalloy.

Interestingly ferrosilicon can be used to make other ferroalloys, such as the manufacture of silicon, corrosion-resistant and high-temperature resistant ferrous silicon alloys, and silicon steel for electromotors and transformer cores. In the manufacture of cast iron, ferrosilicon is used for inoculation of the iron to accelerate graphitization. In arc welding, ferrosilicon can be found in some electrode coatings.

Ferrosilicon is a basis for manufacture of prealloys like magnesium ferrosilicon (MgFeSi), used for production of ductile iron. MgFeSi contains 3–42% magnesium and small amounts of rare earth metals. Ferrosilicon is also important as an additive to cast irons for controlling the initial content of silicon.

Magnesium ferrosilicon is instrumental in the formation of nodules, which give ductile iron its flexible property. Unlike gray cast iron, which forms graphite flakes, ductile iron contains graphite nodules, or pores, which make cracking more difficult.

Ferrosilicon is also used in the Pidgeon process to make magnesium from dolomite. Treatment of high-silicon ferrosilicon with hydrogen chloride is the basis of the industrial synthesis of trichlorosilane.

Sources

A picture tells a thousand words so here goes:

ferrosilicon_sources

Pricing

In recent times prices have been edging up and have reached the highest levels in four years. According to Argus Minor Metals, some buyers are even prepared to commit to take material as far out as August, given an idea of the desperation that is setting in. This surge is being linked to strong demand from the aluminium and chemicals sectors. The aluminium fabricators’ need is due to sustained auto sector demand. Prices in late April hit €2,385- €2,415 per tonne. Supplies are said to be tight and stock levels are low which has prompted experts to say that these factors should support prices in coming months.

In the interesting to note the price rise in the commodity has taken place at a time of depressed iron ore prices.

Conclusion

The linkage between this company and others we look for comes in the form of Victor Cantore who was a driving force at Nemaska Lithium in its early days. The rest of the board is all French Canadian which, dare I say it, seems to mean that the companies tend to be more serious in Quebec than many of the pump-and-dump merchants that emanate from Vancouver. If you want to see production you seem to be more likely to get it from French-Canadian managed companies.

With a track record of moving projects to production the prospects of Canadian Metals becoming a real producer is enhanced. That it should already have a rather stellar team of engineers, with heavy iron ore experience on board, means that we are not looking at the typical “(talk of) building it and they will come” flipper crew but at real business builders.

Canadian Metals have found themselves a somewhat unique niche in the listed markets with no other competitors we know of. With a tailwind from strengthening prices the sooner this project steps up to production mode the better.


Christopher Ecclestone

Editor:

Christopher Ecclestone is the EU Editor for InvestorIntel and is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten ... <Read more about Christopher Ecclestone>


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