The Ace deposit is part of the historic Flat Bay open pit gypsum mines that produced a reported 15 million tonnes from the 1950s until production ceased in 1990.
In a news release, Patrick Laracy, president and chief executive officer of Red Moon, stated that based on historical reports, drilling data, geophysics and field mapping by the company, the gypsum resource was not exhausted and significant potential resources remain.
He said it’s estimated the potential remaining gypsum resources contained adjacent to past producing deposits and surrounding exploration zones of the Flat Bay gypsum deposit may be in the range of 30 to 40 million tonnes on its mineral licences.
Laracy said the estimate is conceptual and not a defined mineral resource, so it will require confirmatory drilling to verify.
Based on identification of potential markets for gypsum, Red Moon Resources has applied for a mining lease from the Government of Newfoundland and Labrador on the Ace deposit.
Markets for gypsum are primarily in the wallboard and cement business based on negotiated contracts. With the increasing switch from coal to natural gas-fired power generation plants in the United States, the supply of synthetic gypsum produced by sulfur dioxide scrubbers in power plant smoke stacks has been significantly reduced.
As a result, an increase in demand for natural gypsum has emerged. In the eastern Canadian market gypsum currently sells, on average, for approximately $15 per tonne. The Ace deposit project could ramp up to a production level in excess of 500,000 tonnes per year as customers are established, Laracy said.
There is ample opportunity to expand the lease if demand warrants it, he said.
Gypsum is mined by traditional open-pit methods suited to scaling of production to meet the demand cycle.
Laracy said as the company proceeds to bring its flagship Captain Cook salt project ahead it is encouraged by the development potential at the Ace deposit.