AXMIN: Revalidated Feasibility Study Details a Significantly Improved Passendro Project Both Technically and Economically
TORONTO, ONTARIO -- (Marketwire) -- 01/31/11 -- AXMIN Inc. (TSX VENTURE: AXM) is pleased to announce the on schedule completion of the revalidated feasibility study ('FS') for its 100% owned Passendro Gold Project in the Central African Republic ('CAR'). The first three years provide an average annual production of 205,000 ounces with an average cash cost of US$437/oz, resulting in a rapid project payback of 2.2 years. The FS was led by SENET (PTY) Ltd. of South Africa ('SENET') and included a multidisciplinary team of independent consultants, all of whom were involved in the original 2008 study.
The FS results indicate a robust project with a NPV at a 5% discount of US$340 million, an IRR of 32%, and a low cash cost of US$484/oz over a mine life of 8.3 years. The strong financial results, together with the fiscal terms of the signed Mining Convention; the award of a 25 year Mining Licence; and significant exploration potential have, contributed significantly to lessening the project risk profile compared to the original 2008 study.
AXMIN is also making excellent inroads in securing the required debt facility for developing the Passendro project. In the fall of 2010, AXMIN re-engaged Endeavour Financial International Corporation ('Endeavour') to provide debt finance advice. The process has been advancing very well and its progress will be announced in the near future.
In addition, the FS identified several areas that require optimization that may result in a lower capital cost that would further improve the project's economic profile. Several of these areas will include mill throughput optimization, contract mining and partner power supply agreements. This review will be undertaken during the detailed engineering and implementation phase of the project.
President and CEO of AXMIN, Mr. George Roach, comments, 'I am extremely pleased with the FS results for Passendro. It demonstrates that the project is now both technically and economically more robust and very well positioned to take advantage of this strong gold market. The FS gives us the documentation we need to secure lending agreements to advance the project. Since taking the helm at AXMIN, I have had a singular focus on advancing this tremendous asset and I strongly believe that we are poised to push forward to our next milestone by securing debt financing and developing CAR's first modern gold mining operation.'
Project Highlights
Assumed Gold Price US$1,100/oz
Assumed Oil Price US$80/bbl
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Mine Throughput 2.8 mtpa
Mine Life 8.3 years
Development & Construction 24 months
Strip Ratio 5.4:1
Average Annual Production years 1-3 205,000 oz
Average Annual Production (LOM) 163,000 oz
Initial Capital Costs (excluding contingency) US$246 million
Total Cash Costs (including royalties) (LOM) US$484/oz
Average Metallurgical Recovery 94%
Gravity Recovery 30%
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IRR (after tax & royalties) 32.1%
NPV (after tax, 5% discount) US$340 million
Operating Cash Flows US$493 million
Payback Period 2.2 years
The Passendro Gold Project is located in a sparsely populated area of the CAR, just 60 km north of the town of Bambari, in the centre of 90 km long Bambari Archaean greenstone belt. Passendro sits in the centre of a 355 sq km 25 year mining licence that was awarded in July 2010. The remainder of the Bambari belt is covered by AXMIN's 100% owned Bambari 1 & 2 permits. The FS envisages a conventional open pit Gravity-Carbon in Leach ('CIL') operation with a mine production rate of 2.8 mtpa. The study outlines an initial mine life of 8.3 years. However, AXMIN is confident that further drilling in and around the existing pits and along the prospective belt will continue to add to the reserves and mine life.
Mineral Resource Estimate - June 2009
The last in-situ Mineral Resource estimate was prepared by independent consultants SRK Consulting (UK) Ltd. ('SRK') in June 2009. The Measured and Indicated mineral resource remains at 2.0 million ounce gold (31.5 Mt grading 2.0 g/t Au) and an Inferred Mineral resource of 1.1 million ounce gold (21.6 Mt grading 1.6 g/t Au). At Main Zone there is a significant amount of low grade material below the current reporting cut off of 0.8g/t. This low grade Measured and Indicated material that total some 27.5 Mt at 0.52g/t (460,000 oz), estimated between a cut off grade of 0.3 to 0.8g/t is included within the classification categories.
Grade interpolation was carried out using ordinary kriging and classification of the Mineral Resource estimate was based on geological continuity, bore hole spacing and the results of a detailed variography analysis. The resource estimates have used different cut off grades ranging from 0.8 to 1.2 g/t Au. High values have been capped at 17 g/t Au at Main Zone, 10 g/t Au at Baceta, 60 g/t Au at Katsia East, 40 g/t Au at Katsia Main and South with no high grade cut applied to Mbourou. The estimates have been prepared under the guidelines of National Instrument 43-101 and accompanying documents 43-101.F1 and 43-101.CF.
Tonnes Grade Contained Gold
Category (million) (g/t Au) (oz)
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Measured & Indicated 31.5 2.0 2,027,000
Inferred 21.6 1.6 1,104,000
Additional Low Grade - Main Zone Pit (0.3 - 0.8 g/t Au)
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Measured & Indicated 27.5 0.5 458,000
Inferred 35.5 0.5 550,000
Mining Reserve Estimate - January 2011
The mining reserve was prepared by SRK utilizing a gold price of US$1,000 per ounce and presented a total proven and probable reserve of 23.5 Mt of ore at an average grade of 1.9 g/t Au containing 1,446,175 ounces gold. Approximately 66% of the ore reported in the pits is oxide material with 21% in transitional ores and 13% within sulphide mineralisation.
Tonnes Grade Contained Gold
Category (million) (g/t Au) (oz)
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Proven 3.5 1.8 207,505
Probable 20.0 1.9 1,238,670
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Total Reserve 23.5 1.9 1,446,175
Note: proven and probable reserve is derived from measured and indicated
resources
Capital Cost
The FS estimates an initial capital cost for construction of the operations at the Passendro Gold Project to be US$265.5 million (including US$20 million of contingency). In addition, working capital of US$8.4 million will be required during the early part of operation and ongoing mine development and sustaining capital of US$41.3 million has been identified over the life of mine. Capital cost estimates are as at fourth quarter 2010 and based on conventional open pit mining using owner-operator mining fleet and a 2.8 million tonne per annum ('mtpa') Gravity-CIL process plant producing. As mentioned above, AXMIN expects that further optimization during the detailed engineering and implementation phase of the project may result in a lower capital cost. See table below for full details of the capital cost.
Capital Cost
Description (US$ Million)
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Initial mining capital cost 26.8
Pre-strip costs 11.5
Pit dewatering 3.5
Tailings 7.3
Process plant direct costs 79.3
Infrastructure costs 45.5
Owners' pre-production costs 7.6
Off-site infrastructure 6.3
Other 2.3
Management & construction 55.0
Contingency 20.4
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Sub-Total $265.5
Working capital $8.4
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Total $273.9
Operating Costs
Estimated operating costs average US$28.02/tonne (US$484/oz Au) over the life of mine and were also based on US$80 barrel oil. A breakdown of the estimated annual operating costs is summarized in the table below.
Life of Mine US$/Tonne
Description (US$ Million) Processed US$ per ounce
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Mining $273.2 $11.62 $201
Processing & Refining $269.4 $11.46 $198
G&A $73.7 $3.13 $54
Royalties $42.5 $1.81 $31
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Total Production Costs $658.8 $28.02 $484
Financial and Sensitivity Analysis
SENET prepared a financial analysis of the Passendro Gold Project using the discounted cash flow model incorporating a US$1,100/per ounce gold price, royalty of 2.25% and corporate tax payable after 5 years of production. The study indicates that the project is economically robust with a positive IRR and NPV over a range of gold prices. Based only on the current proven and probable mineral reserves and an average gold price of US$1,100/oz over the life of mine, the IRR is 32.1%, and the NPV at 5% discount is US340 million with a net cash flow of US$493 million. The following table details the sensitivity of the project to gold price.
Gold Price NPV (5%) NPV (10%)
Variable US$/oz IRR US$ million US$ million
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45.5% $1,600 62.0% $817.2 $616.7
27.3% $1,400 50.7% $627.1 $462.9
9.1% $1,200 38.6% $435.6 $308.1
Base Case $1,100 32.1% $339.8 $230.7
- 18.2% $900 17.9% $147.9 $75.7
Amended Mining Convention - July 2010
Upon the award of the 25 year Mining Licence on July 29, 2010, AXMIN signed an Amendment to the January 2006 Mining Convention. The positive tax considerations detailed in the 2006 Mining Convention have remained intact.
Following is a summary of the 2010 Amended Mining Convention:
- A 2.25% royalty on the proceeds from the sale of gold payable to the CAR
government;
- In lieu of a 10% free carried interest, the CAR government received 26
million common shares of AXMIN and 20 million AXMIN warrants exercisable
over a 5 year period for US$0.30/share;
- A signature bonus of US$11 million payable to the CAR government; US$5
million paid on August 9, 2010 and US$3 million to be paid on each of
April 30, 2011 and 2012; and
- AXMIN receives exemption from:
-- taxes (including value added tax ('VAT')) and duties on fuel used in
the mining operations;
-- VAT on imported capital equipment, consumables and any mining
contract;
-- duties on imported capital equipment and consumables during the
development phase and for a period of 5 years thereafter;
-- exoneration from withholding tax on dividends, capital repayments and
interest; and
-- a five year tax holiday from the date of first commercial production,
following which the corporate tax rate will be 30%.
Qualified Persons
The contents of this press release have been reviewed by the following independent consultants:
Neil Senior, Pr.Eng, MSc, (FSAIMM), Joint Managing Director is a Qualified Person under National Instrument 43-101, and is the SENET person responsible for the Passendro Gold Project Feasibility Study.
Sean Cremin, Bsc Mining Eng (Hons), MIMM, Principal Mining Engineer is a Qualified Person under the National Instrument 43-101, and is the SRK person responsible for the Passendro Gold Project mineral reserve calculation.
About AXMIN
AXMIN is a Canadian exploration and development company with a strong focus on central and west Africa. AXMIN has projects in Central African Republic, Mali, Mozambique, Sierra Leone and Senegal. AXMIN is positioned to grow in value as it progresses its Passendro Gold Project towards development and builds on its project pipeline focusing on transitioning from an explorer to a producer. For more information regarding AXMIN visit our website at www.axmininc.com.
This press release includes certain 'Forward-Looking Statements.' All statements, other than statements of historical fact included herein, including without limitation, statements regarding future plans and objectives of AXMIN; and statements regarding the ability to develop and achieve production at Passendro and to satisfy the terms of the Mining Licence as negotiated, are forward-looking statements that involve various risks and uncertainties.
There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from AXMIN's expectations have been disclosed under the heading 'Risk Factors' and elsewhere in AXMIN's documents filed from time-to-time with the TSX Venture Exchange and other regulatory authorities. AXMIN disclaims any intention or obligation to update or revise any forward-looking statements whether resulting from new information, future events or otherwise, except as required by applicable law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
AXMIN Inc.
George Roach
President & CEO
44 779 626 3999
AXMIN Inc.
Judy Webster
Manager Investor Relations
416 368 0993 ext 221
ir@axmininc.com
www.axmininc.com