International Minerals Signs Definitive Agreement with Hochschild to Fast-Track Production at Inmaculada Gold-Silver Property, Peru
International Minerals Corporation (Toronto and Swiss stock exchanges:
'IMZ? or 'the Company?) (TSX: IMZ)(SWX: IMZ) is pleased to announce that
the Company has signed the definitive joint venture agreement (the 'JV
Agreement?) with Hochschild Mining plc ('Hochschild?) to fast-track
production at the IMZ/Hochschild jointly-owned Inmaculada property
('Inmaculada?) in southeastern Peru. Inmaculada is located 25km south of
the Pallancata silver mine, which is jointly owned by IMZ (40%) and
Hochschild (60%).
The JV Agreement is based on a Framework Agreement signed by IMZ and
Hochschild and announced in a news release dated October 12, 2010. Based
on the terms of the JV Agreement, IMZ now owns a 40% interest in
Inmaculada and Hochschild owns a 60% interest and becomes the operator.
IMZ′s President and CEO, Stephen Kay stated: 'We are pleased to have now
signed the definitive joint venture agreement with Hochschild to
fast-track production at Inmaculada by the end of 2013. Following the
tremendous success of our partnership with Hochschild at the Pallancata
Mine, we look forward to working with them again and to participating in
another successful mine at Inmaculada.?
Principal Terms of the JV Agreement (all in U.S. Dollars):
$15 million in cash to IMZ.
Hochschild made an equity investment in IMZ of $20 million in the form
of a private placement and 3.66 million common shares of IMZ were
issued to Hochschild on November 10, 2010.
Hochschild will provide 100% of the initial $100 million of funding
required to complete a feasibility study and the planning, development
and construction of a mining operation at Inmaculada. Any subsequent
expenditures will be funded 60% by Hochschild and 40% by IMZ.
Hochschild is committed to building a mining operation at Inmaculada
with a process capacity of 3,000 tonnes per day (unless the parties
agree that such capacity is not optimal) by December 2013, subject to
any unforeseen delays under 'force majeure? conditions of the JV
Agreement.
If Hochschild fails to achieve the process capacity at Inmaculada by
December 2013 (subject to any force majeure delays), then Hochschild
must make quarterly pre-payments to IMZ during the period of any delay
based on the parties′ joint estimate of IMZ′s 40% share of cash flows
that would have been generated if production had started on schedule.
Upon commencement of commercial production, quarterly pre-payments will
cease and pre-payments previously made to IMZ will be repaid to
Hochschild from 50% of any cash distributions or dividends payable to
IMZ in respect of the Inmaculada Mine until the pre-payments have been
fully reimbursed to Hochschild.
Hochschild will be operator of the project. Upon commencement of
commercial production, Hochschild will charge the joint venture
company a 7% management services fee based on the aggregate operating
costs incurred by the joint venture during such mining operation.
The management fee currently charged by Hochschild for the Pallancata
Mine will be reduced from 10% to 7% effective January 1, 2011.
A minimum of 20,000 meters of drilling per year for the first three
years (the 'Exploration Drilling Program?) must be carried out for
evaluation of exploration targets outside of the main Angela Vein
deposit. The Exploration Drilling Program will be funded 60% by
Hochschild and 40% by IMZ.
IMZ is no longer required to solely fund and complete a feasibility
study at Inmaculada or to issue 200,000 common shares of IMZ to
Hochschild because the previous agreement with Hochschild has been
terminated and replaced by the JV Agreement.
Inmaculada Resource Estimate and Scoping Study
On September 9, 2010, IMZ announced the results of an independent
Preliminary Economic Assessment (or Scoping Study) for the Angela Vein
deposit at Inmaculada and an updated NI 43-101 Technical Report for the
Inmaculada project has been filed on SEDAR.
Highlights of the Scoping Study using $1,000 per ounce ('/oz?) gold and
$17/oz silver include:
Conceptual mine production (after 5% mining loss and 20% mining
dilution): 8.0 million tonnes ('Mt?) at an average grade of 3.8 g/t
gold and 137 g/t silver or 6.1 g/t gold equivalent.
Recovered ounces ('ozs?): 858,000 ozs gold and 29.3 million ozs silver
or approximately 1.35 million ounces of gold equivalent (based on
metallurgical recoveries of 88% for gold and 83% for silver).
Pre-tax cash flows: $660 million non-discounted, $434 million at a 5%
discount rate and $286 million at a 10% discount rate.
Pre-tax Internal Rate of Return (?IRR?) of 41%.
Total cash operating cost of $52 per tonne.
Total cash operating cost/oz:
Basis gold with silver credited as a by-product: negative $94 per
oz of gold.
Basis gold equivalent: $311/oz of gold equivalent.
Initial Capital: $168 million (including $32.9 million in contingency).
Total cash operating cost per oz, including capital:
Basis gold with silver credited as a by-product: $231/oz.
Basis gold equivalent: $517/oz
3,000 tonnes per day underground mine using a long hole stoping mining
method and conventional recovery process by flotation to produce a
saleable gold-silver concentrate.
General
The technical information reported in this news release was reviewed and
approved by IMZ′s Qualified Person, VP of Corporate Development, Nick
Appleyard.
Hochschild Mining does not accept any responsibility for the adequacy
or inadequacy of the disclosure made in this news release and any
responsibility is hereby disclaimed in all respects.
About International Minerals
International Minerals is a silver-gold producer and developer with
silver and gold production from its 40%-owned Pallancata Mine in Peru,
one of the top-10 primary silver mines in the world. Production of
approximately 10 million ounces of silver and 33,000 ounces of gold (on
a 100% project basis) is estimated by IMZ in calendar year 2010. with
similar production expected in calendar year 2011.
In addition to the Pallancata Mine, IMZ also owns a 40% interest in the
Inmaculada gold-silver project in Peru and majority or 100% ownership
interests in development stage gold projects in Nevada (Goldfield and
Converse) and Ecuador (Rio Blanco and Gaby). IMZ also owns a 3% net
smelter return (NSR) royalty from Barrick′s Ruby Hill gold mine in
Nevada, which produced approximately 100,000 gold ounces in 2009.
IMZ is listed on the Toronto Stock Exchange (since 1994) and the Swiss
Stock Exchange (since 2002).
Cautionary Statement:
Some of the statements contained in this release are 'forward-looking
statements? within the meaning of Canadian securities law requirements.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to differ materially from the anticipated
results, performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements in this release
include statements regardingestimates of capital and operating
costs; economic returns; timing and significance of future cash flows
and revenue from the project; and timing and scale of production and
processing; and resource estimates. Factors that could cause actual
results to differ materially from anticipated results include risks and
uncertainties such as: risks relating to estimates of production and
processing rates; risks relating to estimates of mineral resources;
risks relating to capital and operating costs; risks relating to
obtaining mining and environmentalpermits; mining and
development risks; risk of commodity price fluctuations; political and
regulatory risks; risks of timing and completion of complex
restructuring transactions; and other risks and uncertainties detailed
in the Company′s Renewal Annual Information Form for the year ended June
30, 2010, which is available at www.sedar.com
under the Company′s name. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
International Minerals Corporation
In North America
Paul
Durham, +1 203-940-2538
VP Corporate Relations
or
In
Europe
Oliver Holzer, +41 44 853 00 47
Marketing Consultant
IR@intlminerals.com
http://www.intlminerals.com