Mediterranean - Corak and Tac Gold/Base Metals project positive Preliminary Assessment on development of mine and mill
VANCOUVER, Aug. 23, 2011 /CNW/ --
VANCOUVER, Aug. 23, 2011 /CNW/ - Mediterranean Resources Ltd. (TSX: MNR)
(Frankfurt: MHM1) ('Mediterranean' or the 'Company') has filed on SEDAR
the final report for its Preliminary Assessment ('PA') study on the
development of the Corak and Tac deposits at its Yusufeli project in
North-eastern Turkey. This study (which is compliant with National
Instrument 43-101 and can be accessed in full at www.sedar.com), has been prepared by SRK Consulting (Canada) Inc. ('SRK') of
Vancouver, British Columbia. The Company had previously announced the
initial release of key details from this study on June 14(th) 2011, which is accessible at: www.medresources.ca/news/2011/june14/
IMPORTANT REVISION TO ELECTRICITY COSTS
Due to the recent advancement of the Arkun Hydroelectric Dam (see our
release of August 19, 2011), upstream from the Yusufeli project, the
Company and the consultants preparing the PA became aware that there
would be a significant lowering in electricity costs to the project.
Electrical power is estimated to account for 20% of processing and G&A
costs. Every $0.01/kwh reduction in power cost improves base case
PT-NPV(5%) by $2.7M. Thus, in this full version of the PA, the lower cost of US$
0.15 cts/kwh was incorporated and resulted in a meaningful increase in
the Net Cash Flow of the project compared with the data presented in
the initial press release of June 14, 2011.
HIGHLIGHTS:
PRELIMINARY ASSESSMENT ON MEASURED, INDICATED AND INFERRED RESOURCES AT
CORAK AND TAC DEPOSITS
-- Net Present Value (before tax and interest) of US$366 M and
US$256 M using one year and two year historic metals prices
respectively
-- Net Present Value (before tax and interest) of US$157 M and
US$87 M using three year historic and base case metals prices
respectively
-- In-pit, contained resources of 14.4 Mt, 905,000 oz gold, 104
Mlb of zinc, and 32 Mlb of copper and 40 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 $125 M (including a 25%
contingency)
-- Projected mine life of 7.2 years and average annual production
over mine life of 94,500 oz Au.
-- Project 100% owned by Mediterranean Resources
-- Located in a favorable mining jurisdiction
-- Extensive unexplored territory near the project
Potential cash flow model outputs are shown in the following table:
Case B Case C Case D
Parameter Unit Case A 3-year Ave 2-year Ave 1-year Ave
Base Case Metal Metal Metal
Prices* Prices* Prices*
Gold Price US$/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$M 87 157 256 366
and before tax
and interest
Net Present
Value - before
tax and US$M 51 105 184 270
interest (5%
Discount
rate)
Internal Rate
of Return - % 16 25 37 48
before tax and
interest
Pre-production Production
Capital Years 3 2.5 1 < 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 the Preliminary Assessment 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 preliminary
assessments. 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 will 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 only 6 km from the project, 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.
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/future prices at the time (May 2011).
Qualified Persons
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 in May
2009 (the '2009 Report'). The wireframe model for Tac and the resource
estimation work for both Tac and Corak 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 Corak was created by Wayne Barnett.
Chris Bonson is responsible for the sections of the 2009 Report dealing
with geology, deposit types and mineralization. Mike Redfearn was
responsible for the metallurgical testing and mineral processing
section of the 2009 Report. The 2009 report was reviewed by Dr.
Jean-François Couture. By virtue of their education, membership to a
recognized professional association and relevant work experience, each
of Mr. Ghayemghamian, Mr. Nowak, Dr. Bonson, Dr. Barnett, Mr. Redfearn
and Dr. Couture is an Independent Qualified Person 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 PA. 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 and reviewed and signed
off by SRK
-- Mining studies were completed 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
Each of the aforementioned, excluding Mr. Brimage, is an Independent
Qualified Person under National Instrument 43-101, and has reviewed and
approved the technical information in this release for which he was
responsible.
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 expresses or involves 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 are 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.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2011/23/c5469.html
Christopher Ecclestone
Chief Executive Officer
604-669-3397
www.medresources.ca