MEDITERRANEAN - CORAK AND TAC GOLD/BASE METALS PROJECT POSITIVE PRELIMINARY ASSESSMENT ON DEVELOPMENT OF MINE AND MILL
VANCOUVER, June 14, 2011 /CNW/ --
VANCOUVER, June 14, 2011 /CNW/ - Mediterranean Resources Ltd. (TSX: MNR)
(Frankfurt: MHM1) ('Mediterranean' or the 'Company') has undertaken a
Preliminary Assessment ('PA') study on the development of the Corak and
Tac deposits at its Yusufeli project in North-eastern Turkey. This
study has been prepared by SRK Consulting (Canada) Inc. ('SRK') of
Vancouver, British Columbia.
HIGHLIGHTS:
PRELIMINARY ASSESSMENT ON MEASURED, INDICATED AND INFERRED RESOURCES AT
CORAK AND TAC DEPOSITS
-- Undiscounted pre-tax Net Cash Flow of US$343 M and US$233 M,
using one year and two year historic metals prices respectively
-- Net Present Value (before tax and interest) of US$251 M and
US$165 M using one year and two year historic metals prices
respectively
-- In-pit, contained Indicated resources of 13.7 Mt, 856,000 oz
gold, 97 Mlb of zinc, and 30 of lead. In-pit Inferred resources
total 0.7 Mt, 48,000 oz gold, 6 Mlb of zinc, and 2 Mlb of
copper and 2 Mlb of lead using metal prices of US$1,000/oz
gold, US$2.75/lb copper, US$0.85/lb lead, $0.90/lb zinc and
US$16.00/oz silver for the base case optimization
-- Two stage mining with Corak pit being exploited first followed
by the Tac deposit
-- Initial Capital Expenditure of $125 M (including a 25%
contingency)
-- Projected mine life of 7.2 years and average annual production
over mine life 94,500 oz Au.
-- Project 100% owned by Mediterranean Resources
-- Located in a favorable mining jurisdiction
-- Extensive unexplored territory
Potential cash flow model outputs are shown in the following table:
Parameter Case B Case C Case D
Unit Case A Base 3-year Ave 2-year Ave 1-year Ave
Case Metal Metal Metal
Prices* Prices* Prices*
Gold Price US$/oz 1,000 1,094 1,207 1,346
Silver Price US$/oz 16.00 19.00 21.96 27.36
Copper Price US$/lb 2.75 3.06 3.41 3.84
Zinc Price US$/lb 0.90 0.86 0.97 1.00
Lead Price US$/lb 0.85 0.89 1.00 1.06
Net Cash Flow
- undiscounted US$M 64 134 233 343
and before tax
and interest
Net Present
Value - before
tax and US$M 32 86 165 251
interest (5%
Discount rate)
Internal Rate
of Return - % 12 22 34 45
before tax and
interest
Pre-production Production
Capital Years 4 3 2 1
Payback Period
Payable Gold oz 680,000
Payable Silver oz 115,000
Payable Copper Mlb 29
Payable Zinc Mlb 88
Payable Lead Mlb 33
*As at May 31, 2011 calculated from LME monthly averages
The economic results summarized in this press release are only intended
to provide an initial, high-level review of the project potential. The
PA mine plan and economic model include the use of inferred resources
which are considered to be too speculative to be used in an economic
analysis except as allowed for in PA's. There is no guarantee that
inferred resources can be converted to indicated or measured resources
and, as such, there is no guarantee that the project economics
described herein will be achieved.
Background and Discussion of the Preliminary Assessment Study (PA)
The Corak deposit is predominantly a gold deposit with strong zinc and
lead components (and a small amount of silver) while the Tac deposit is
largely a gold deposit with a strong copper component. Both are
amenable to open pit mining.
The objective is to first mine and mill the higher-grade (and lower
stripping ratio) gold and base metals of the Corak deposit producing a
Pb/Zn flotation concentrate on-site for shipment to an international
smelter. This first phase will last for approximately four years. The
second phase with be the mining of the Tac deposit producing a
gold-rich copper flotation concentrate.
Daily throughput of the mill is proposed to be 5,500 tonnes per day
('tpd') (approximately two million tonnes per annum 'Mtpa').
As the town of Yusufeli is located at only 6 km distance, there will be
no requirement for a permanent camp. Mining will be undertaken by a
Turkish firm on a contract basis, thus minimizing the capital
requirements for mine equipment.
The mill is planned to be constructed above the high-water mark of the
projected Yusufeli dam. Dry-stacked tailings would also be placed above
the dam's high water mark.
Project Tenure
The mining Concessions cover an area of approximately 9,583 hectares and
consist of a total of twelve granted, contiguous mining concessions,
all of which are owned by Akdeniz Resources Madencilik A.S., which is
owned 100% by Mediterranean Resources Ltd.
The project, which is the subject of the PA, is located within the
boundaries of the mining Concessions.
The four mining Concessions for which the Company holds production
permits, are in good standing and valid until varying dates between
2012 and 2014 and allow a right to mine subject to compliance with the
regulatory requirements.
Relevant permits required (and yet to be obtained) for the development
and mining will be: change of permitted land use, environmental permit
and permit for construction. There will also be a number of compliance
notifications and filings with municipal, state and federal
governments.
Mining Study
SRK has completed a mining study and has estimated mineable resources
for the Corak and Tac deposits. SRK has also produced a mine schedule
for the mineable resources constrained inside a US$1,000 gold,
US$2.75/lb copper, US$0.85/lb lead, US$0.90ct/lb zinc and US$16.00/oz
silver optimized pit shell for the two mines.
SRK completed the pit optimization and design incorporating geotechnical
recommendations in regard to pit slope geometry and mineable resources
estimated by SRK. The optimization inputs for the mining study work
were based on known test work parameters and metal price
historic/futures prices at the time (May 2011). The optimization input
parameters are summarized below in Table 3.
SRK estimated the in-pit resources in Table 2 as a subset of the total
mineral resources shown in Table 1.
Table 1: Mineral Resource Statement*, Yusufeli Property, Artvin
Province, Turkey, SRK Consulting (Canada) Inc., May 8, 2009
Classification Quantity Grade Contained Metal
Tonnes Au Cu Ag Pb Zn AuEq Au Cu Ag Pb Zn
Deposit (millions) (g/t) (%) (g/t) (%) (%) (g/t) (Moz) (Mlb) (Moz) (Mlb) (Mlb)
Indicated
Mineral
Resource
Taç 23.80 1.24 0.12 - - - 1.39 0.95 64.00 - - -
Çorak 25.70 0.76 - 1.57 0.25 0.60 1.26 0.63 - 1.30 141.00 340.34
Total 0.99 0.12 1.57 0.25 0.60 1.32 1.58 64.00 1.30 141.00 340.34
Indicated 49.50
Inferred
Mineral
Resource
Taç 3.20 1.56 0.14 - - - 1.72 0.16 9.81 - - -
Çorak 7.80 0.53 - 1.42 0.20 0.48 0.93 0.13 - 0.35 34.76 82.00
Total Inferred 11.00 0.83 0.14 1.42 0.20 0.48 1.16 0.29 9.81 0.35 34.76 82.00
* Mineral resources that are not mineral reserves do not have
demonstrated economic viability. All figures rounded to reflect the
relative accuracy of the estimates. Reported at an NSR cut-off grade of
US$11 per tonne, within Whittle shells with slope angles of 55 degrees,
using 15 by 15 by 15 metres block models. NSR and gold equivalent
(AuEq) calculated using metal prices of US $900 per ounce of gold, $2
per pound of copper, $1 per pound each of zinc and lead and considering
metal recoveries of 90% and 85% for gold at Taç and Çorak,
respectively, and 80% copper, 80% silver, 81% zinc, and 81% lead. NSR
and gold equivalent values include transportation refining/smelting and
royalty costs. Mining and processing (to a concentrate) costs are not
included.
Description Unit Corak Tac Total
Indicated Resources
Insitu tonnage (Mt) 4.6 9.1 13.7
In-situ grades
Au (g/t) 1.82 2.00 1.94
Ag (g/t) 2.28 N/A 2.28
Cu (%) N/A 0.15 0.15
Zn (%) 0.96 N/A 0.96
Pb (%) 0.38 N/A 0.38
NSR (US$/t) 52.24 54.60 53.81
Contained Metal
Au (koz) 270 586 856
Ag (koz) 337 N/A 337
Cu (mlbs) N/A 30 30
Zn (mlbs) 97 N/A 97
Pb (mlbs) 38 N/A 38
Inferred Resources
Insitu tonnage (Mt) 0.2 0.5 0.7
In-situ grades
Au (g/t) 1.07 2.50 2.10
Ag (g/t) 3.20 N/A 3.20
Cu (%) N/A 0.21 0.21
Zn (%) 1.45 N/A 1.45
Pb (%) 0.40 N/A 0.40
NSR (US$/t) 43.28 69.28 61.92
Contained Metal
Au (koz) 7 41 48
Ag (koz) 21 N/A 21
Cu (mlbs) N/A 2 2
Zn (mlbs) 6 N/A 6
Pb (mlbs) 2 N/A 2
Total Waste Tonnage (Mt) 17.3 72.7 90.0
Strip ratio (t:t) 3.6 7.6 6.2
Table 3: Pit Optimization Inputs for Mining Study Work
Mining Cost (US$/t mined) $1.95
Processing Costs (US$/t)
Corak $20.80
Tac $18.80
Tailings Cost (US$/t mined) $3.80
G&A costs (US$/t) processed $1.86
Copper in Cu concentrate 93%
Gold in Cu concentrate 80%
Gold in Zn concentrate 80%
Silver in Zn concentrate 73%
Zinc in Zn concentrate 93%
Lead in Pb concentrate 86%
Gold Selling Price (US$/oz) $1,000.00
NSR 2%
Table 4 provides the PA processing schedule for the two pits with Corak
being mined from years 1 to 4 and Tac being mined from years 4 to 8.
Table 4: Annual Production schedule with 2 Mtpa mill rate
Material Metal Sold
Year Processed Strip Ratio Gold Lead Zinc Copper Silver Gold Eq.
Mtonnes koz Mlb Mlb Mlb koz koz
1 0.4 6.17 17.6 2.7 6.0 10.9 25.5
2 2.0 3.44 103.4 15.9 41.5 64.8 155.3
3 2.0 4.06 63.2 12.6 35.0 34.2 105.9
4 1.9 8.00 78.5 1.7 5.9 4.81 5.4 98.6
5 2.0 7.97 123.3 5.50 138.4
6 2.0 7.97 96.7 5.71 112.4
7 2.0 7.89 87.0 7.47 107.6
8 2.1 4.47 110.5 5.38 125.3
Total 680.2 32.9 88.4 28.9 115.4 868.9
The gold equivalent ounces is calculated using the base case gold,
silver and base metal prices of
US$1,000/oz for gold, US$16.00/oz for silver, US$2.75/lb for copper,
US$0.85/lb for lead and US$0.90/lb for zinc.
Engineering & Development
SRK provided the capital cost estimate for the mine, mill and tailings
storage design, hydrological assessment and pit slope analyses for both
the Corak and Tac pits.
Table 5 summarizes the capital costs for project development. These
costs have been estimated from actual quotes for new equipment,
estimates based on other similar operations and general unit costs plus
contingencies appropriate for this level of study.
Table 5: Estimated Capital Costs
Area Units Total Pre-production Sustaining
Mine (assumes contract mining) M$ 2.0 2.0
Mill & Infrastructure M$ 56.0 56.0
Construction Indirects M$ 21.2 21.2
Dry-Stack Tailings Management
Facility M$ 31.5 15.8 15.8
Owners costs M$ 4.7 4.7
Closure M$ 20.0 20.0
General sustaining capital M$ 9.0 9.0
Contingency M$ 36.1 25.0 11.2
TOTAL CAPITAL COST M$ 180.5 124.6 55.9
The mining capital estimate from SRK for a contractor supplied/operated
fleet at the commencement of operations for the 2 Mtpa mine and mill is
$2 M. Tailings will be a dry-stacked tailings management facility with
a projected capital cost of $31.5 M.
Sustaining capital of US$10.1 M will be required over the life of mine.
Environmental
Environmental baseline studies have been undertaken since 2006 by Dama
Engineering, Golder Associates and Envirotest. The Company shall make
application in the near future for environmental authority application
for exploitation at Yusufeli.
Next Steps
The study and assessment are the basis upon which a decision to mine
will be considered by the Board of Mediterranean Resources. Any such
decision will be taken after careful consideration during the next
stage of review, assessment and funding progresses. No timelines have
been prescribed. There can be no assurance that the Company will decide
to bring the project into production. Whilst some matters are outside
of the Company's control, the Board will move diligently in progressing
Yusufeli and the exploration and development of other projects.
Within the next 45 days, Mediterranean Resources will release an updated
National Instrument 43-101 compliant technical report, which will
include all of the details of the PA. The updated report will be filed
on SEDAR.
Competent / Qualified Person
The information in this release that relates to Exploration Results,
Mineral Resources, and Metallurgy is based on information compiled in
the Technical Report on the Yusufeli Property prepared by SRK
Consulting in May 2009. The wireframe model for Taç and the resource
estimation work for both Taç and Çorak were completed by Abolfazl
Ghayemghamian under the supervision of Marek Nowak, Principal
Geostatistician, who also oversaw the data verification and resource
validation. The wireframe model for Çorak was created by Wayne Barnett.
Chris Bonson is responsible for the sections of that report dealing
with geology, deposit types and mineralization. Mike Redfearn was
responsible for the metallurgical testing and mineral processing
section of this report. That technical report was reviewed by Dr.
Jean-François Couture. By virtue of their education, membership to a
recognized professional association and relevant work experience, Mr.
Ghayemghamian, Mr. Nowak, Dr. Bonson, Dr. Barnett, Mr. Redfearn and Dr.
Couture are Independent Qualified Persons as defined by National
Instrument 43-101.
The Preliminary Assessment was prepared by an integrated engineering
team led by SRK as the primary author of the Assessment. The following
Qualified Persons were involved in the development of the Preliminary
Assessment, and have reviewed and approved the contents of this news
release:
-- Overall management and cost estimate preparation for the
Preliminary Assessment was led by Gordon Doerksen, P.Eng. of
SRK
-- Process plant design was led by David Brimage MAusIMM of
Ausenco Solutions Canada Incorporated
-- Mining studies were completed reported by Dino Pilotto, P.Eng.
of SRK
-- Engineering design and costing of the tailings management
facility, waste dump and surface water management
infrastructure were the responsibility of Maritz Rykaart,
P.Eng. of SRK
-- Pit geotechnical design parameters were provided by Bruce
Murphy of SRK, a Fellow of the South African Institute of
Mining and Metallurgy
The aforementioned are Qualified Persons under National Instrument
43-101, have reviewed and approved the technical information in this
release for which they were responsible.
About Mediterranean Resources
Mediterranean Resources is a precious and base metals exploration and
development company. The Company is currently focused on Turkey where
it is developing the Yusufeli gold/copper/lead/zinc project in the
northeastern province of Artvin.
The Technical Report entitled 'Technical Report on the Yusufeli
Property, Artvin Province, Turkey' dated May 8, 2009 is available on
the Company website and on SEDAR (www.sedar.com).
Additional information about the Company is available on the Company's
website at www.medresources.ca and on SEDAR. Neither Toronto Stock
Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the Toronto Stock Exchange) accepts responsibility
for the adequacy or accuracy of this release.
Signed on behalf of the Board of Directors.
Forward-Looking Information
This news release contains 'forward-looking information' under Canadian
securities law. Any information that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but not
always, using words such as 'expect', 'anticipate', 'believe', 'plans',
'estimate', 'scheduling', 'projected' or variations thereof or stating
that certain actions, events or results 'may', 'could', 'would',
'might' or 'will' be taken, occur or be achieved, or the negative of
any of these terms and similar expressions) are not statements of
historical fact and may be forward-looking information. Forward-looking
information relates to, among other things: the price of silver and
gold; the accuracy of mineral resource and mineral reserve estimates;
the ability of the Company to finance its operations and capital
expenditures; future financial and operating performance including
estimates of the Company's revenues and capital expenditures and
estimated production. Forward-looking information are subject to a
variety of known and unknown risks, uncertainties and other factors
that could cause actual events or results to differ from those
reflected in the forward-looking information, including, without
limitation, risks relating to: fluctuating commodity prices;
calculation of resources, reserves and mineralization and precious and
base metal recovery; interpretations and assumptions of mineral
resource and mineral reserve estimates; exploration and development
programs; feasibility and engineering reports; permits and licenses;
title to properties; recent market events and conditions; economic
factors affecting the Company; timing, estimated amount, capital and
operating expenditures and economic returns of future production;
operations and political conditions; environmental risks; and risks and
hazards of mining operations. This list is not exhaustive of the
factors that may affect any of the Company's forward-looking
information. Forward-looking information about the future are
inherently uncertain, and actual achievements of the Company or other
future events or conditions may differ materially from those reflected
in the forward-looking information due to a variety of risks,
uncertainties and other factors. Although the Company has attempted to
identify important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be as
anticipated, estimated, described or intended. Accordingly, readers
should not place undue reliance on forward-looking statements or
information. The Company's forward-looking information is based on the
assumptions, beliefs, expectations and opinions of management as of the
date of this press release, and other than as required by applicable
securities laws, the Company does not assume any obligation to update
forward-looking statements and information if circumstances or
management's assumptions, beliefs, expectations or opinions should
change, or changes in any other events affecting such statements or
information. For the reasons set forth above, investors should not
place undue reliance on forward-looking information.
The TSX does not accept responsibility for the adequacy or accuracy of
this release.
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Christopher Ecclestone
Interim Chief Executive Officer
604-669-3397
www.medresources.ca