Orvana Announces Preliminary Economic Assessment for Copperwood Project, Upper Peninsula, Michigan, USA
TORONTO, ONTARIO -- (Marketwire) -- 09/13/10 -- Orvana Minerals Corp. (TSX: ORV) announced today the highlights of their 43-101-compliant Preliminary Economic Assessment of the Copperwood copper project, Upper Peninsula, Michigan, USA. The study contemplates a 10-year underground operation that applies room-and-pillar mining. A trade-off study determined that the most economic mining method is the use of a continuous miner, which is commonly used in coal, salt, trona, and potash underground mines. Processing would be by froth flotation. The table below is a summary of the financial results.
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Pre-Tax Cash Flow Analysis Summary (With Ag Credit)
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NPV' (000's) Copper Price (US$)/Silver Price (US$)
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1.75 / 12.00 2.00 / 13.00 2.25 / 14.00 2.50 / 15.00
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0 39,246 145,268 250,739 355,661
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5 -4,719 61,863 128,100 193,991
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8 -19,575 31,781 82,870 133,694
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10 -26,415 17,100 60,390 103,454
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12.5 -32,463 3,190 38,658 73,941
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IRR 4.3% 13.2% 20.2% 26.2%
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Payback, yrs 8.4 6.1 4.4 3.8
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Pre-Tax Cash Flow Analysis Summary (With Ag Credit)
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NPV' (000's) Copper Price (US$)/Silver Price (US$)
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2.75 / 16.00 3.00 / 17.00 3.25 / 18.00 3.50 / 19.00
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0 460,033 563,855 667,128 769,850
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5 259,537 324,737 389,593 454,103
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8 184,251 234,541 284,566 334,324
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10 146,292 188,905 231,292 273,453
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12.5 109,040 143,953 178,682 213,226
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IRR 36.1% 36.5% 41.0% 45.2%
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Payback, yrs 3.4 3.2 3.0 2.9
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Base-case operational parameters are as follows:
Short tons in conceptual mine
plan: 17,661,000
Copper grade: 1.51%
Throughput: 1,800,000 short tons per year (for 9 years)
Avg. Annual Production (LOM): 22,000 short tons per year Cu
103,000 ounces per year Ag
Copper recovery: 85%
Copper concentrate grade: 26%
Key financial input parameters are (all values in US dollars):
Pre-production capital (direct): $99,300,000
Pre-production capital (indirect): $19,000,000
Pre-production capital (contingency): $25,000,000
Pre-production capital (TOTAL) $143,300,000
Working & sustaining capital (LOM): $87,100,000
Mine operating cost (LOM) $ 8.64 per short ton ore
Processing cost: $10.80 per short ton ore
G&A: $2.50 per short ton ore
A net smelter return royalty, which will be determined quarterly, ranges from 2% to 4% on a sliding scale based on inflation-adjusted copper prices.
'Copperwood is an attractive copper project and we will work towards applying for a mine permit next spring,' said Roland Horst, Chief Executive Officer of Orvana. 'The award of a mine permit for Kennecott's Eagle nickel-copper mine shows that the state of Michigan considers mining essential to their future economic growth, and Copperwood can definitely be a part of that growth. We are encouraged by the communities' support to develop the deposit and look forward to working with them to put the mine into production.'
Copperwood is a stratiform copper deposit hosted by the shales and siltstones of the lowermost Nonesuch Formation along the shallow-dipping southern limb of the westward-plunging Western Syncline. Copper occurs as very fine-grained chalcocite. Orvana has options to lease mineral rights on the other stratiform copper deposits within the Western Syncline and recently retained AMEC E & C Services Inc. to evaluate whether these deposits can be classified as NI 43-101-compliant inferred resources (see 9 July 2009 press release).
Conventional drill-and-blast, roadheader, and continuous miner mining methods were evaluated. The continuous miner was preferred due to lower operating costs even though dilution of the ore can be as high as 20% if all of the copper-bearing sequence should be mined; in the mine plan presented, hangingwall dilution is minimized in the early years in order to maintain higher grades. Access to the deposit will be by a ramp and box cut. After initial development, production would ramp up to 1.8 million short tons per year within 2 years.
Various opportunities were identified in order to improve the project economics including drilling out the inferred resource to add tons, increase throughput, further optimize the mining method and mine plan, and continue metallurgical testing to improve recoveries and concentrate grade as well as prepare a mine design using copper prices more than $2.00/lb, which price established a cutoff grade of 1.00% copper. KD Engineering of Tucson, Arizona has been retained to supervise the pursuit of these opportunities and move the project forward to prefeasibility.
Orvana plans to submit a mine-permit application to the state of Michigan authorities during the spring of 2011.
Mineral resources that are not mineral reserves do not have a demonstrated economic viability.
The information presented herein was completed by or under the supervision of Joseph M. Keane, P.E., Lynn Partington, P.E., and Luquman Shaheen, P.E., Independent Qualified Persons for the purposes of NI 43-101. A summary report will be made available on the Company's website, www.orvana.com, and on SEDAR, www.sedar.com within 45 days.
About Orvana
Orvana Minerals is a gold producer with a strong balance sheet and is transforming itself into a multi-mine gold and copper producer. Orvana's primary asset is the El Valle/Boinas-Carles ('EVBC') gold-copper project in northern Spain, which is expected to be in production early in 2011. Orvana owns and operates the Don Mario gold mine in Bolivia where the company is developing the gold-copper-silver Upper Mineralized Zone ('UMZ') deposit, which is expected to be in production during the fall of 2010. In addition, Orvana is advancing its Copperwood copper project in Michigan, USA. Additional information is available at Orvana's website (www.orvana.com).
Forward Looking Disclaimer
Certain statements in this press release constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ('forward-looking statements'). Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, potentials, future events or performance (often, but not always, using words or phrases such as 'believes', 'expects' 'plans', 'estimates' or 'intends' or stating that certain actions, events or results 'may', 'could', 'would', 'might', 'will' or 'are projected to' be taken or achieved) are not statements of historical fact, but are forward-looking statements.
Forward-looking statements relate to, among other things, all aspects of the development of the Upper Mineralized Zone ('UMZ') deposit at the Don Mario Mine in Bolivia, the El Valle-Boinas/Carles project in Spain and the Copperwood project in Michigan and their potential operations and production; the outcome and timing of decisions with respect to whether and how to proceed with such development and production; the timing and outcome of any such development and production; estimates of future capital expenditures; mineral resource estimates; estimates of permitting time lines; statements and information regarding future feasibility studies and their results; production forecasts; future transactions; future metal prices; the ability to achieve additional growth and geographic diversification; future production costs; future financial performance, including the ability to increase cash flow and profits; future financing requirements; and mine development plans.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Orvana as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Orvana contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in the Company's most recently filed Annual Information Form, or as otherwise expressly incorporated herein by reference as well as: there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at the UMZ deposit, El Valle- Boinas/Carles and the Copperwood projects being consistent with the Company's current expectations; political developments in any jurisdiction in which the Company operates being consistent with its current expectations; certain price assumptions for gold, copper and silver; prices for key supplies being approximately consistent with current levels; production and cost of sales forecasts meeting expectations; the accuracy of the Company's current mineral reserve and mineral resource estimates; and labour and materials costs increasing on a basis consistent with Orvana's current expectations.
A variety of inherent risks, uncertainties and factors, many of which are beyond the Company's control, affect the operations, performance and results of the Company and its business, and could cause actual events or results to differ materially from estimated or anticipated events or results expressed or implied by forward looking statements. Some of these risks, uncertainties and factors include fluctuations in the price of gold, silver and copper; the need to recalculate estimates of resources based on actual production experience; the failure to achieve production estimates; variations in the grade of ore mined; variations in the cost of operations; the availability of qualified personnel; the Company's ability to obtain and maintain all necessary regulatory approvals and licenses; the Company's ability to use cyanide in its mining operations; risks generally associated with mineral exploration and development, including the Company's ability to develop the UMZ deposit, the Copperwood project or the El Valle-Boinas/Carles project; the Company's ability to acquire and develop mineral properties and to successfully integrate such acquisitions; the Company's ability to obtain financing when required on terms that are acceptable to the Company; challenges to the Company's interests in its property and mineral rights; current, pending and proposed legislative or regulatory developments or changes in political, social or economic conditions in the countries in which the Company operates; general economic conditions worldwide; and the risks identified in Orvana's Management's Discussion and Analysis for the period ended September 30, 2009 under the heading 'Risks and Uncertainties'. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements and reference should also be made to the Company's Annual Information Form for a description of additional risk factors.
Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions and, except as required by law, the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change. Readers are cautioned not to put undue reliance on forward-looking statements.
Contacts:
Orvana Minerals Corp.
Natalie Frame
Investor Relations
(289) 200-7640
Orvana Minerals Corp.
Bill Williams
Vice President, Corporate Development
(480) 522-7925
Orvana Minerals Corp.
Roland Horst
Chief Executive Officer
(416) 369-1629
ask_us@orvana.com
www.orvana.com