Star Mountain Resources Receives Industry Guide 7 Mineral Reserves Report on Balmat Mine
585,000 Tons of Proven and Probable Reserves With 9.2% Grade Zinc Expected to Generate an Estimated $80.8 Million in Revenue Over an Initial 2.5-Year Mine PlanTEMPE, Feb 3, 2016 - Star Mountain Resources Inc. (OTC PINK: SMRS) is pleased to announce that it has received an Industry Guide 7 Mineral Reserve Report (the "IG7 Report") for its Balmat mine property located in St. Lawrence County, New York. The report supports Star Mountain Resources' initial reserve estimate since acquiring the property in November 2015, and reflects 585,000 tons of Proven and Probable Reserves with 9.2% grade zinc that could generate an estimated $80.8 million in revenue over an initial 2.5-year mine plan.
Current reserve estimates are based on this 2.5-year plan, which is part of a larger, 8.5-year mine plan that includes mineralized material adjacent to the current reserves of similar grade to the reserves, and in all likelihood will be reclassified to reserve status as the mine progresses.
Joe Marchal, Star Mountain Resources CEO, states, "We believe the findings in the IG7 report are very positive and reaffirm our confidence that the geological and engineering conditions reflected in the long production history of the Balmat mining operation can be sustained well into the future beyond the initial 2.5-year plan. We continue to evaluate the current zinc market and the best strategy to move forward with a production plan and schedule. Moreover, it will form an integral part of our long-range plan for the safe, efficient and effective operation of the mine."
Key takeaways from the report include the following conclusions:
- The Balmat Mine and mill is in good condition and can be placed into production with minimal expense and time.
- The mill is capable of producing high grade zinc concentrate suitable for sale to smelters worldwide.
- The mine is well situated being close to tide water and well connected by road and rail service.
- The mine is a low cost fully mechanized operation.
- Mine equipment fleet has been carefully stored and is capable of exceeding the planned production rate.
- Upgrades to the mine ventilation system and modifications to the diesel equipment fleet will be required to meet more stringent Diesel Particulate Matter (DPM) regulation adopted since the mine was placed on care and maintenance.
In addition to mineral reserve estimate, cash flow and economic analysis, the comprehensive report also includes a thorough property description, history, project status, status of mineral titles, royalties, environmental liabilities and more.
A summary of the economic analysis included in the IG7 Report is included in the following table:
| Ore Mined for Processing | 585,000 | tons | ||||
| Zinc Grade | 9.2 | % | ||||
| Contained Zinc | 53,820 | tons | ||||
| Capital Development | 9,067 | feet | ||||
| Mill Recovery | 96 | % | ||||
| Zinc Recovered in Concentrate | 51,700 | tons | ||||
| Zinc Price | $ | 0.92 | /pound | |||
| Smelter Deduction | 15 | % | ||||
| Smelter Treatment Charges | $ | 187.51 | /ton concentrate | |||
| Transportation Charges | $ | 21.51 | /ton concentrate | |||
| Penalty Charges | $ | 20.00 | /ton concentrate | |||
| Revenue | $ | 80,788,000 | ||||
| Operating Costs (Includes 15% Contingency | $ | (39,533,000 | ) | |||
| Smelter Charges | $ | (21,313,000 | ) | |||
| Royalty 0.3% | $ | (178,000 | ) | |||
| EBITA | $ | 19,764,000 | ||||
| Capital | $ | (14,745,000 | ) | |||
| Income Tax | $ | (590,000 | ) | |||
| Net Income | $ | 4,427,000 | ||||
| Discounted Cash Flow @ 5% | $ | 3,165,000 | ||||
| Payback Period | 2.5 | years | ||||
| Profitability Index | 1.2 | |||||
| Internal Rate of Return | 25 | % |
The IG7 report is available on Star Mountain Resources' website- www.starmountainresources.com.
Mark Osterberg, president & COO, states, "The report recommends initiatives we plan to pursue aimed at lowering operating expenses, increasing zinc recovery and concentrate grades and minimizing internal mine dilution. Among the recommended initiatives are dense media separation test work, changes to ore control procedures and investigation of pillar recovery methods. We are very encouraged by the report and look forward to developing a strategy to move forward in a timely, cost effective and profitable manner."
Property Description and Location
The Balmat mine is in the historic Balmat-Edwards zinc district in St. Lawrence County, New York. The mine and mill complex is seven miles southeast of Gouverneur, New York at 44° 14' 51" North latitude, 75° 23' 50" West longitude. The Balmat-Edwards Zinc District has been active since the early 1900s. Zinc is mined from underground, and the historical workings are quite extensive. Surface facilities are situated on property owned by our wholly owned subsidiary St. Lawrence Zinc Company LLC ("SLZC") in the town of Fowler. We own about 2,699 acres of fee simple land in various locations within the Balmat-Edwards district, and hold mineral rights to approximately 56,000 acres. The Balmat-Edward district mineralization is characterized by unique and favorable properties, including unusually high zinc grades and low lead content. The mining project is located towards the western end of the district, which lies along the hinge line of the southwest northeast trending Sylvia Lake Syncline. The 2,699 acres of surface rights owned by SLZC are divided among the Fowler, Edwards and Pierrepont townships, containing, respectively 1,754, 703 and 242 acres. The 51,428-acres of mineral rights are located in St. Lawrence and Franklin Counties and are comprised of multiple individual parcels in selected areas in and around the mines. We also have 4,774-acres of leased and optioned mineral rights in portions of the Balmat, Hyatt and Pierrepont mine areas as well as in two areas of interest for exploration purposes.
Balmat Mine Location Map
To see the map, please view the attached image or visit http://dtn.fm/balmat-mine-location-map
The following are definitions of the defined terms used in this news release:
Reserve: That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. Reserves are customarily stated in terms of "ore" when dealing with metalliferous minerals; when other materials such as coal, oil, shale, tar, sands, limestone, etc. are involved, an appropriate term such as "recoverable coal" may be substituted.
Proven (Measured) Reserves: Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Probable (Indicated) Reserves: Reserves for which quantity and grade and/or quality are computed form information similar to that used for proven (measure) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
About Us
Star Mountain Resources Inc. is a junior exploration and mining company focused on acquiring and consolidating mining claims, mineral leases, producing mines, and historic mines with production and future growth potential. Our operations are currently focused on base metal and precious metal mining acquisitions in North America, and re-commencing mining activities at the Balmat Zinc mine in upstate New York. For additional information visit www.starmountainresources.com.
Safe Harbor Statement
This news release contains statements that involve expectations, plans or intentions (such as those relating to our ability to commence mining operations, ore prices and future business or financial results) and other factors discussed from time to time in the Company's Securities and Exchange Commission filings. These statements are forward-looking and are subject to risks and uncertainties, so actual results may vary materially. You can identify these forward-looking statements by words such as "may," "should," "expect," "anticipate," "believe," "estimate," "intend," "plan" and other similar expressions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors not within the control of the company. The company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.