Astur Gold Reports Positive Preliminary Economic Assessment for Salave Gold Project Highlights:- Pre-tax Net Present Value (NPV) ranging from US$374,000,000 to US$576,000,000 using a base case gold price of US$1,100 per ounce, and a 5% discount rate.
Highlights:
- Pre-tax Net Present Value (NPV) ranging from US$374,000,000 to US$576,000,000 using a base case gold price of US$1,100 per ounce, and a 5% discount rate.
- Internal Rate of Return (IRR) ranging from 34% to 54%.
- Annual production of 107,500 oz to 133,300 oz of gold per year at a cash cost of US$419/oz to US$529/oz for POX and US$435/oz to US$547/oz for BOX.
- Throughput rate of 1.1 million tonnes per year.
- Pre-production capital expenditure payback period ranging 2.0 to 3.1 years.
- Total net incomes ranging from US$663,000,000 to US$1,195,000,000 at US$1,100/oz gold price.
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 02/16/11 -- Astur Gold Corp. (TSX VENTURE: AST)(FRANKFURT: CDC) ('Astur Gold' or the 'Company') is pleased to announce positive Preliminary Economic Assessment (the 'Study') results for its 100% owned Salave Gold Project in Asturias, Spain. The Study was compiled by Golder Associates of Spain and the results strongly demonstrate the technical and economic viability of the Project.
The Study examines three different mining scenarios. An open pit only scenario ('OP'), an underground only scenario ('UG'), and a combined open pit and underground scenario ('OP UG'). In addition, the Study combines the mining scenarios with two processing options: a Bio Oxidation scenario ('BOX') and a Pressure Oxidation scenario ('POX').
TABLE 1: SUMMARY OF OUTCOMES FOR DIFFERENT SCENARIOS
---------------------------------------------------------------------------
SCENARIO MINING OXIDATION LOM NET INCOME PAY BACK NPV (5%) IRR
---------------------------------------------------------------------------
(years) (US$M) (years) (US$M) (%)
---------------------------------------------------------------------------
1 Large OP POX 18 1195 3.1 576 34%
---------------------------------------------------------------------------
2 Large OP BOX 18 1115 3.0 548 36%
---------------------------------------------------------------------------
3 UG POX 10 714 2.2 391 46%
---------------------------------------------------------------------------
4 UG BOX 10 663 2.0 374 53%
---------------------------------------------------------------------------
5 COMBINED POX 14 902 2.1 486 47%
---------------------------------------------------------------------------
6 COMBINED BOX 14 844 2.0 464 54%
---------------------------------------------------------------------------
Cary Pinkowski, CEO and Director of Astur Gold commented: 'We are excited with the results of our Preliminary Economic Assessment. Clearly, the project will generate robust profitability from any of the proposed mining options. We evaluated multiple production and processing scenarios, giving us a wide range of information from which to select the optimal mine plan for the Company, the Community of Tapia, and the Government of Asturias. Astur Gold is advancing Salave towards production as expeditiously as possible for the benefit of all stakeholders.'
Mining Scenarios
Scenarios 1 & 2 - Large open pit
-- A large initial open pit ('OP') with a minor underground ('UG')
component at the end of the mine life will produce 21Mt at an average
grade of 2.87g/t Au over the 18 year life of mine ('LOM') (17.6 Mt
Measured & Indicated at 2.92 g/t Au). This method recovers the largest
portion of the orebody.
-- These scenarios will have a pre-tax NPV (at a 5% discount rate) of $576
million to $548 million and a mine life of 18 years for the POX and BOX
processing methods respectively. The Internal Rate of Return ('IRR') for
these same scenarios will range between 34% and 36%.
-- Average annual gold production will be 107,500 oz. Average annual cash
costs will be US$419/oz for POX and US$435/oz for BOX.
-- Results from Scenarios 1 and 2 are summarized below in Table 2:
TABLE 2: SCENARIOS 1 & 2 - LARGE OPEN PIT
---------------------------------------------------------------------------
Mine method OPEN PIT UG
---------------------------------------------------------------------------
LOM OP Strip ratio 1.74 m3/t
---------------------------------------------------------------------------
LOM OP average grade 2.81g/t
---------------------------------------------------------------------------
LOM UG average grade 4.10 g/t
---------------------------------------------------------------------------
Life of Mine (LOM) 18 years
---------------------------------------------------------------------------
Cut - Off OP 0.74 g/t
---------------------------------------------------------------------------
Ore Tonnes 20,953 kt
---------------------------------------------------------------------------
LOM average throughput 1.1 Mtpa
---------------------------------------------------------------------------
Gold Price 1,100 US$/oz
---------------------------------------------------------------------------
Scenarios 3 & 4 - Underground only
-- The underground only option will produce 9.8Mt at an average grade of
4.23 g/t Au (8.3 Mt Measured & Indicated at 4.31 g/t Au) over the 10
year mine life. This option provides the best payback at 2.0 to 2.2
years dependent on the processing method employed.
-- These scenarios have a pre-tax NPV (at a 5% discount rate) of US$391
million and US$374 million and IRR of 46% and 53% for the POX and BOX
processing methods respectively.
-- Scenario 3 and 4 focuses on the extraction of a smaller tonnage, higher
grade portion of the orebody. This method would result in the least
amount of surface disturbance and mining facility footprint.
-- Average annual gold production will be 133,300 oz. Average annual cash
costs will be $529/oz for POX and $547/oz for BOX.
-- Results from Scenarios 3 and 4 are summarized below in Table 3:
TABLE 3: SCENARIOS 3 & 4 - UNDERGROUND
---------------------------------------------------------------------------
Mine method UG
---------------------------------------------------------------------------
LOM average grade 4.23 g/t
---------------------------------------------------------------------------
Life of Mine (LOM) 10 years
---------------------------------------------------------------------------
Cut - Off 2.07 g/t
---------------------------------------------------------------------------
Ore Tonnes 9,801kt
---------------------------------------------------------------------------
LOM average throughput 1.0 Mtpa
---------------------------------------------------------------------------
Gold Price 1,100 US$/oz
---------------------------------------------------------------------------
Scenarios 5 & 6 - Combined smaller open pit and underground
-- Initial underground mining will operate concurrently with a small open
pit 400 meters in diameter. This mining approach would target higher
grade ore at depth and a small open pit operation to recover near
surface lower grade ore. This method would increase the total ore
recovered than mining scenarios 3 and 4, extend the mine life, and also
minimize the pit size and surface disturbance proposed with mining
scenarios 1 and 2.
-- The pre-tax NPV (at a 5% discount rate) will be between $486 million and
$464 million with an IRR of 47% and 54% over a 14 year mine life for the
POX and BOX processing options respectively.
-- The combined mining method would produce 542,575 oz Au from open pit and
1,006,093 oz Au from the underground operation.
-- Average annual gold production will be 106,500 oz. Average annual cash
costs will be $454/oz for POX and $467/oz for BOX.
-- The results of Scenario 5 and 6 are summarized below in Table 4:
TABLE 4: SCENARIOS 5 & 6 - COMBINED MINING METHOD
---------------------------------------------------------------------------
Mine method UG OP
---------------------------------------------------------------------------
LOM OP average grade 2.55 g/t
---------------------------------------------------------------------------
LOM UG average grade 4.44 g/t
---------------------------------------------------------------------------
Life of Mine (LOM) 14 years
---------------------------------------------------------------------------
Cut - Off OP 0.74 g/t
---------------------------------------------------------------------------
Ore Tonnes 13,682 kt
---------------------------------------------------------------------------
LOM average throughput 1.0 Mtpa
---------------------------------------------------------------------------
Gold Price 1,100 US$/oz
---------------------------------------------------------------------------
Other parameters used to evaluate the feasibility potential of the deposits are summarized in Table 5:
TABLE 5: INPUT PARAMETERS FOR PRELIMINARY ECONOMIC ASSESSMENT
---------------------------------------------------------------------------
Gold Price US$1100/oz
---------------------------------------------------------------------------
UG mining Recovery 90%
---------------------------------------------------------------------------
Flotation Mass Recovery 6.2%
---------------------------------------------------------------------------
Flotation Recovery 96.5%
---------------------------------------------------------------------------
Oxidizing weight Factor 130%
---------------------------------------------------------------------------
POX CIL Recovery 99.0%
---------------------------------------------------------------------------
POX Overall Plant Recovery 95.5%
---------------------------------------------------------------------------
POX CIL Recovery 94.9%
---------------------------------------------------------------------------
BOX Overall Plant Recovery 91.6%
---------------------------------------------------------------------------
OP Ore Mining Cost 1.58 EUR/t
---------------------------------------------------------------------------
OP Waste Mining Cost 1.01 EUR/t
---------------------------------------------------------------------------
UG Mining Cost 28.65 EUR/t
---------------------------------------------------------------------------
Processing Cost POX 18.08 EUR/t
---------------------------------------------------------------------------
Processing Cost BOX 17.67 EUR/t
---------------------------------------------------------------------------
Sustaining Capital 0.25%
---------------------------------------------------------------------------
Capital Contingency 12.0%
---------------------------------------------------------------------------
Capital Cost Factor 1.0
---------------------------------------------------------------------------
Operating Cost Factor 1.0
---------------------------------------------------------------------------
Sales Cost 0.4%
---------------------------------------------------------------------------
Refining Costs 0.4%
---------------------------------------------------------------------------
Grants Received 10%
---------------------------------------------------------------------------
Discount Factor 5%
---------------------------------------------------------------------------
Processing Options
Once mined, the ore responds well to flotation with gold recoveries in excess of 96%. BOX achieved maximum sulphide oxidation levels of between 96.5% and 99.6% on the individual and blended samples. Gold extraction after 24 hours on the oxidized residues varied between 91.9% and 97.8%. Cyanide consumptions were high ranging from 15.6 kg/t to 25.4 kg/t, however this reflected a test work objective of maximizing gold dissolution rather than optimizing cyanide consumption. Lime consumption was also high for BOX, ranging between 35.8 kg/t and 110 kg/t. POX achieved maximum sulphide oxidation levels of between 98.4% and 99.8% on the individual and blended concentrate samples. Gold extraction on the oxidized residues was very high at 98.6% to 99.1% after 24 hours, with low cyanide consumption of approximately 1 kg/t.
Capital Costs
Capital costs have been estimated for the six scenarios. Initial development capital expenditures range from $124.8 million to $153.7 million, as shown in Table 6. It is assumed that the mining fleet will be a contract operation in all scenarios. Sustaining capital over the life of the project is estimated to range from $3.9 million to $6.6 million.
TABLE 6: DEVELOPMENT CAPITAL COSTS ($US millions)
----------------------------------------------------------------------------
Scenario Scenario Scenario Scenario Scenario Scenario
1 2 3 4 5 6
----------------------------------------------------------------------------
Mining 11,897 11,897 8,622 8,622 9,408 9,408
----------------------------------------------------------------------------
Process 79,121 61,573 79,121 61,573 79,121 61,573
----------------------------------------------------------------------------
Tailings 11,790 11,790 12,052 12,052 9,170 9,170
----------------------------------------------------------------------------
Infrastructure 10,912 13,696 10,912 13,696 10,912 13,696
----------------------------------------------------------------------------
EPCM 16,076 12,501 16,076 12,501 16,076 12,501
----------------------------------------------------------------------------
Owners Cost & Land 7,336 7,336 4,192 4,192 4,978 4,978
----------------------------------------------------------------------------
Contingency 16,606 14,295 15,916 12,203 15,809 13,521
----------------------------------------------------------------------------
Total Development
CAPEX 153,739 133,089 146,892 124,839 145,476 124,847
----------------------------------------------------------------------------
Economics
The economics of the project have been evaluated at a gold price of US$1,100/oz and all scenarios indicate a robust return for the project. The economics presented in Table 7 are on a pre-tax basis and are presented for the range of mining and processing options investigated.
Using a base case gold price of $1,100 per ounce, the Study shows:
-- Undiscounted net pre-tax incomes ranging from $663 million to $1,195
million.
-- Pre-tax Net Present Value (NPV) ranging from of $374 million to $576
million using a 5% discount rate.
-- Internal Rate of Return (IRR) ranging from 34% to 54%.
-- Total gold production ranges from 1.27 to 1.85 million ounces under
different scenarios.
-- The final life of mine (LOM) tonnage, grade and strip ratios used to
generate the various economic outcomes varied depending on the various
mining options considered.
-- The corporate tax rate in Spain is 30% and there is no tax royalty for
gold revenues.
-- All dollar amounts presented in this press release are expressed in
1stquarter 2011 US dollars.
-- An exchange rate of 0.76 Euro to US dollars was used where costs were
based on Euro expenditures.
The project NPV has been examined at various gold prices, as summarized in Table 7.
TABLE 7: NPV SENSITIVITY TO GOLD PRICE ($US millions)
----------------------------------------------------------------------------
NPV (0%) Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6
----------------------------------------------------------------------------
1000 871 816 453 427 621 588
----------------------------------------------------------------------------
1100 1,051 989 579 547 767 727
----------------------------------------------------------------------------
1400
Upside
Case 1,594 1,510 955 908 1,202 1,144
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NPV (5%) Scenario 1 Scenario 2 Scenario 3 Scenario 4 Scenario 5 Scenario 6
----------------------------------------------------------------------------
1000 467 443 300 285 385 367
----------------------------------------------------------------------------
1100 576 548 391 374 486 464
----------------------------------------------------------------------------
1400
Upside
Case 906 863 667 638 787 753
----------------------------------------------------------------------------
Resource Base
The Study was based on a resource base of 2,155,000 tonnes grading 3.88 g/t Au (Measured), 15,790,000 tonnes grading 2.79 g/t Au (Indicated) and an additional 3,770,000 tonnes grading 2.80 g/t Au (Inferred). This resource estimate was completed in February 2010 by Scott Wilson RPA of Toronto (See Astur Gold Corp Press Releases - April 21, 2010).
TABLE 8: MINERAL RESOURCE STATEMENT FOR THE SALAVE GOLD DEPOSIT
----------------------------------------------------------------------------
Au Grade Contained Au
Category Tonnes g/t (Oz)
----------------------------------------------------------------------------
Measured 2,155,000 3.88 268,000
----------------------------------------------------------------------------
Indicated 15,790,000 2.79 1,415,000
----------------------------------------------------------------------------
Measured & Indicated 17,945,000 2.92 1,683,000
----------------------------------------------------------------------------
Inferred 2,600,000 1.94 160,000
----------------------------------------------------------------------------
Underground (Inferred) 1,170,000 4.70 178,000
----------------------------------------------------------------------------
-- Open pit Mineral Resources are estimated at the pit discard cut-off
grade of 0.7 g/t Au.
-- Underground resources are estimated at the cut-off grade of 2.5 g/t Au
Au and a minimum 4m vertical thickness of mineralization.
-- Average density of mineralized rock is 2.74 t/m3 for the Salave gold
deposit.
-- Resources taken from NI 43-101 report, 'Technical Report on Salave Gold
Deposit, Spain', by Scott Wilson RPA, February 25, 2010.
Note: Mineral resources that are not mineral reserves do not have demonstrated economic viability. The Scoping Study includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
Summary of Salave Gold Deposit Geology
The Salave gold deposit includes five Mineral Concessions covering a total area of 433 ha. The Salave gold deposit is hosted mainly by the Salave granodiorite, in close proximity to the contact with the Los Cabos Formation. The deposit contains gold mineralization along numerous north to northwest trending and gently west dipping irregular lenses. In certain areas, mineralization is affected by a set of north trending structures that define a complex network, within a northeast trending shear zone. Gold mineralization is also present within the adjacent metasedimentary rocks of the Los Cabos Formation.
NI 43-101 Report
The NI 43-101 Technical Report documenting these results will be filed on www.sedar.com and on the Company's corporate website www.asturgold.com within 45 days of the news release.
Qualified Person
The Study, including a new mineral resource estimate for a proposed underground operation at the Salave Gold project has been prepared by Golder Associates Global Iberica S.L.U. (Golder), under the direction of its Managing Director Dr. Arturo Gutierrez del Olmo, European Engineer, and under the direct supervision of Sergio Tenorio, European Geologist, Qualified Person (QP) under National Instrument 43-101. Utilizing the underground mining parameters and updated economic factors defined in the Study, Golder has revised and reported an underground resource based on the report 'Technical Report on the Salave Gold Deposit, Spain', dated February 25, 2010 and authored by Hrayr Agnerian, of Scott Wilson RPA Inc. of Toronto, Canada (reference Astur Gold Press Release April 21, 2010). For the purpose of the re-evaluation, Golder has considered the geostatistics and block model generated for the preparation of the aforementioned Technical Report. Golder relies on, but does not guarantee, the validity of the block model. The Q.P., Sergio Tenorio has reviewed and approved the contents of this release.
ABOUT GOLDER ASSOCIATES
Golder Associates is an employee-owned company with international expertise in ground engineering, earth and environmental services. Its areas of expertise include oil and gas, mining, manufacturing, power, and transportation. Golder Associates has over 7,000 employees, operating from 160 offices located throughout Europe, Africa, Asia, Australasia, North America, and South America.
ABOUT ASTUR GOLD
The Company is developing its 100% owned Salave Gold Project in northern Spain. Salave is one of the largest undeveloped gold deposits in Western Europe. The property has a NI 43-101 compliant mineral resource estimate containing 1,683,000 oz of gold in the Measured & Indicated category (2,155,000 tonnes grading 3.88 g/t Au Measured and 15,790,000 tonnes grading 2.79 g/t Au Indicated) with an additional 338,000 oz of gold in the Inferred category (3,770,000 tonnes grading 2.8 g/t Au). Salave is subject to NI 43-101 report, 'Technical Report on Salave Gold Deposit, Spain', dated March 5, 2010 available on SEDAR.
There is excellent exploration potential at Salave, with four of the principal high grade zones of mineralization open at depth. Additional exploration areas to the west have also yet to be tested. Previous metallurgical tests indicate gold recoveries in the order of 90% are possible. The region boasts excellent infrastructure and a history of mining that will help support future mine development. Astur Gold is advancing Salave towards production and cultivating an enduring partnership with the people of Asturias in developing economic prosperity for the region.
ON BEHALF OF THE BOARD
Cary Pinkowski, Chief Executive Officer and Director
Forward-Looking and other Cautionary Information
This release includes certain statements that may be deemed 'forward-looking statements'. All statements in this release, other than statements of historical facts, that address estimated resource quantities, grades and contained metals, possible future mining, exploration and development activities, are forward-looking statements. In particular, Preliminary Economic Assessments are preliminary in nature, including Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that the findings of the Preliminary Assessment will be realized. Although the Company believes the expectations expressed in the Preliminary Economic Assessment and other forward-looking statements are based on reasonable assumptions, such statements should not be in any way construed as guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices for metals, the conclusions of detailed feasibility and technical analyses, lower than expected grades and quantities of resources, mining rates and recovery rates and the lack of availability of necessary capital, which may not be available to the Company on terms acceptable to it or at all. The Company is subject to the specific risks inherent in the mining business as well as general economic and business conditions. For more information on the Company, Investors should review the Company's annual Form 20-F filing with the United States Securities Commission and its home jurisdiction filings that are available at www.sedar.com.
Information Concerning Estimates of Measured, Indicated and Inferred Resources: This news release also uses the terms 'indicated resources' and 'inferred resources'. Astur Gold Corp. advises investors that although these terms are recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities and Exchange Commission does not recognize them. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. In addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for Preliminary Assessment as defined under 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
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:
Astur Gold Corp.
Vadim Dubchak
#300-1055 West Hastings Street, Vancouver, B.C., V6E 2E9
604-694-1600
604-694-1663 (FAX)
info@asturgold.com
www.asturgold.com