TORONTO, ONTARIO (AMEX: MRB) is pleased to report that Pincock
Allen & Holt (PAH) has prepared a Technical Report and
completed a detailed review of the Feasibility Study provided to
Metallica by Xstrata Copper for the El Morro copper-gold project in
Chile. The El Morro project is operated under a joint venture
agreement between Xstrata Copper (70%) and Metallica (30%). The
base case elements of the Feasibility Study provided by Xstrata
were released on January 21, 2008. Below are the results of PAH's
review of the Feasibility Study for Metallica. All dollar amounts
are in US dollars.
- An initial capital investment of $2.52 billion, including a
contingency for price escalation of 13%. The capital cost estimates
are considered to be accurate to within 15%.
- The project economic model, which is based on the capital cost
and operating parameters set forth in the Feasibility Study and
recreated and reviewed by PAH, shows a positive after tax internal
rate of return of 14.7% and a Net Present Value US$1.09 billion
when discounted at a rate of 8% and using long-term prices of
$2.80/lb for copper and $625/oz for gold. Project payback occurs at
4.7 years (see Table 1 below for details).
- Operating costs are estimated at $10.55/tonne of ore and a
mine site cash cost of $0.76/lb copper, after gold credits and
production taxes at a long-term gold price of $625/ounce. The
operating costs are considered to be accurate to within 15%.
- Average annual metal production during the first five years
has been projected to be 203,000 tonnes per year (tpy) of copper
and 302,000 ounces per year (oz/y) of gold. The average annual LOM
production over the currently estimated 14-year mine life is
projected to be 172,000 tpy copper and 313,000 oz/y gold.
- The Feasibility Study was based on the La Fortuna copper-gold
deposit which contains proven and probable ore reserves totaling
450 million tonnes averaging 0.58% copper and 0.46 g/t gold with an
average waste-to-ore ratio of 3.65:1 (see Table 2 below for
details). Average metallurgical recoveries are estimated at 88.5%
for copper and 69.0% for gold.
- The ore reserves are contained within a larger economically
constrained "mineral resource pit" consisting of measured and
indicated resources totaling 558 million tonnes averaging 0.55%
copper and 0.49 g/t gold, and inferred resources totaling 62
million tonnes averaging 0.34% copper and 0.18 g/t gold at a 0.3%
copper-equivalent cut-off and based on metals prices of $1.25/lb
copper and $500/oz gold (see Table 3 below for details).
Xstrata has also reported to Metallica that additional resources
occurring outside the mineral resource pit include indicated
resources totaling 52 million tonnes averaging 0.57% copper and
0.61 g/t gold, and inferred resources totaling 234 million tonnes
averaging 0.51% copper and 0.48 g/t gold at a cut-off 0.3% copper
equivalent. These additional resources have not been included in
the review by PAH, because they are not integral to the Feasibility
Study ore reserve. They are included here, however, consistent with
previous disclosures regarding the El Morro mineral resource (see
Metallica NI 43-101 Technical Report dated Dec. 26, 2006).
Based on its review of the Feasibility Study, PAH has made the
following recommendations:
- Initiate detail engineering design work to optimize the
project in areas such as water use, metallurgical processing,
tailings disposal, and possibly others.
- Re-running the pit optimization to develop a mine plan based
on the most recent resource estimate completed in October 2007. The
current resource estimate used for the Feasibility Study was
completed in July 2007.
- Submittal of final environmental permit applications following
a joint decision to develop the project by Xstrata and
Metallica.
Details of the El Morro Feasibility Study are provided in an
independent NI 43-101 Technical Report prepared for Metallica by
PAH and recently filed on SEDAR. The Qualified Persons, as defined
by Canadian NI 43-101, responsible for the independent review of
the El Morro Feasibility Study and preparation of the Technical
Report are Mr. Richard J. Lambert - Registered Professional
Engineer and Vice President of Mining and Geological Services for
PAH, and Mr. Barton G. Stone, Certified Professional Geologist -
AIPG and Chief Geologist for PAH. The Qualified Person responsible
for the statement of mineral resources occurring outside the
mineral resource pit is Mr. Raul Roco, Member - AusIMM and Manager
of Mines Geology for Xstrata Copper. The Qualified Person
responsible for the preparation of this Press Release and the
presentation of the information contained herein is Mr. Mark A.
Petersen, Certified Professional Geologist - AIPG and Vice
President of Exploration for Metallica Resources Inc.
Metallica Resources is a Canadian gold and silver producer. It
currently has 96.4 million shares outstanding and no debt. For
further details on Metallica Resources, please visit the company's
website at www.metal-res.com.
INFORMATION IN THIS NEWS RELEASE THAT IS NOT CURRENT OR
HISTORICAL FACTUAL INFORMATION MAY CONSTITUTE FORWARD-LOOKING
INFORMATION OR STATEMENTS WITHIN THE MEANING OF THE UNITED STATES
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND APPLICABLE
CANADIAN SECURITIES LEGISLATION. IMPLICIT IN THIS INFORMATION,
PARTICULARLY IN RESPECT OF STATEMENTS AS TO FUTURE OPERATING
RESULTS AND ECONOMIC PERFORMANCE OF THE COMPANY, AND RESOURCES AND
RESERVES AT THE COMPANY'S MINERAL PROJECTS, ARE ASSUMPTIONS
REGARDING PROJECTED REVENUE AND EXPENSE, GOLD, SILVER AND COPPER
PRICES, AND MINING COSTS. THESE ASSUMPTIONS, ALTHOUGH CONSIDERED
REASONABLE BY THE COMPANY AT THE TIME OF PREPARATION, MAY PROVE TO
BE INCORRECT. READERS ARE CAUTIONED THAT ACTUAL RESULTS ARE SUBJECT
TO A NUMBER OF RISKS AND UNCERTAINTIES, INCLUDING RISKS RELATING TO
GENERAL ECONOMIC CONDITIONS AND MINING OPERATIONS, AND COULD DIFFER
MATERIALLY FROM WHAT IS CURRENTLY EXPECTED. 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.
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Table 1: El Morro Project Feasibility Study - PAH Economic Evaluation
Base Case and metal price sensitivity (metal prices move together)
----------------------------------------------------------------------------
PAH
Base
Case(1)
Copper Price ($/lb) $ 2.25(2) $2.80 $ 3.35 $ 3.90
Gold Price ($/oz) $ 500 $625 $ 750 $ 875
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After Tax Economics ($ millions)
Cash Flow 2,464 4,463 6,382 8,341
NPV @ 8% 151 1,086 2,022 2,957
IRR 9.0% 14.7% 19.6% 24.1%
Cash Operating Cost ($/lb copper)(3) $ 0.84 $0.76 $ 0.68 $ 0.60
Payback (years) 6.5 4.7 3.4 2.7
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Notes: 1) Base Case metals prices closely approximate 3 year rolling average
prices for copper and gold as of March 31, 2008
2) $2.25/lb copper, $500/oz gold prices closely approximate 5 year
rolling average prices as of March 31, 2008
3) Net of gold by-product credit and includes production taxes
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Table 2: El Morro Project Feasibility Study - La Fortuna Mineral Reserves
----------------------------------------------------------------------------
Tonnes Cu Au CuEq Copper lbs Gold ozs
Category (000's) % g/t % (000,000's) (000's)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Proven 208,473 0.66 0.53 0.97 3,029 3,539
Probable 241,761 0.50 0.41 0.75 2,686 3,172
--------- --------- ------ ------ ------ ------- -------
Total Reserves 450,234 0.58 0.46 0.85 5,715 6,711
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Note: CuEq grade based on metal prices of $1.25/lb copper and $500/oz gold
and the equivalent copper equation :
CuEq = Cu% + (0.592 x Au g/t)
where Cu% represents copper grade
Au g/t represents gold grade
0.592 is a constant based on metal recoveries and prices of
$1.25/lb copper and $500/oz gold
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Table 3: El Morro Project - La Fortuna Mineral Resources
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Inside Mineral Resource Pit(1)
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Cut-off Tonnes Cu Au Copper lbs Gold ozs
Category CuEq(2) (000's) % g/t (000,000's) (000's)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Measured 0.3 211,164 0.65 0.54 3,011 3,693
0.4 204,948 0.66 0.56 2,974 3,668
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Indicated 0.3 347,242 0.49 0.46 3,717 5,170
0.4 289,327 0.53 0.52 3,392 4,876
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Total M&I 0.3 558,406 0.55 0.49 6,729 8,863
0.4 494,275 0.58 0.54 6,366 8,544
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Inferred 0.3 62,335 0.34 0.18 472 366
0.4 27,538 0.43 0.27 264 237
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Outside Mineral Resource Pit
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Indicated 0.3 55,000 0.57 0.61 691 1,079
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Inferred 0.3 234,000 0.51 0.48 2,631 3,611
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Notes: 1) "Mineral Resource Pit" based on metal prices of $1.25/lb copper
and $500/oz gold.
2) CuEq lower cut-off based on the equivalent copper equation
explained in Table 2 above.
Contacts: Metallica Resources Inc. Rhonda Bennetto Director
Investor Relations (303) 640-3292 Website: www.metal-res.com
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