VANCOUVER, Nov. 11 /PRNewswire-FirstCall/ -- Aurizon Mines Ltd.
(TSX:ARZ; AMEX:AZK) is pleased to report that it has received a
positive Pre-feasibility Study and is proceeding to final
feasibility on its Joanna project. Joanna is expected to create
excellent synergies with Aurizon's asset base in the prolific gold
producing Abitibi region of Quebec and the proposed open pit
operation has the potential in itself to increase Aurizon's gold
production by 60% to approximately 260,000 ounces per year. Aurizon
also continues to actively pursue merger and acquisition
opportunities that would also be accretive to shareholder value.
The Pre-feasibility Study was prepared by BBA Inc., Montreal,
Quebec ("BBA") with contributions from other leading engineering
firms and consultants, in accordance with National Instrument
43-101 Standards of Disclosure for Mineral Projects as defined by
("NI 43-101") and highlights are summarized below: Assumptions Gold
Price (US$/oz) 825 Canadian $ to US$ rate 1.10 Fuel price
(C$/litre) 0.70 Mineral Reserves Hosco Mineral Reserves (million
ounces) 1.0 Mine Parameters Ore milled Mine plan tonnage (million
tonnes) 23.6 Mine plan grade (grams/tonne) 1.31 Stockpile grade
tonnage (million tonnes) 2.4 Stockpile grade (grams/tonne) 0.35
Waste to ore ratio 3.8:1 Production rate (annualized tonnes per
day) 8,500 Estimated gold recovery (%) 86.8 Total gold recovered
(ounces) 887,000 Pre-production period (years) 1.5 Mine life
(years) 8.3 Average annual gold production (ounces) 110,000 Costs
Pre-production capital ($ millions) 187 Initial site restoration ($
millions) 5 Sustaining capital and restoration ($ million) 31 Cost
per tonne milled ($/t) 16.25 Average operating cash cost per ounce
(US$/oz) 434 Average total cash cost per ounce (US$/oz) 455
Financial Return Payback from start of production (years) 3.9
Internal Rate of Return (before tax) 14.4% Net present value, pre
tax, 5% discount ($ millions) 74 (All dollar figures expressed in
Canadian dollars, except where indicated) At the prevailing gold
price as of November 6, 2009, of US$1,090 per ounce and a Canadian
to U.S dollar exchange rate of 1.07, Aurizon has determined that
the pre-tax NPV increases to $249 million at a 5% discount rate and
the pre-tax IRR increases to 31.8%. The study was prepared as a
stand-alone project, relating solely to the mineral reserves
located on the Hosco deposit, and accordingly does not take into
account any of the mineral resources contained in the Heva deposit,
which also forms a significant part of the Joanna Project. The
Pre-feasibility Study also does not take into account all the
synergies which would be anticipated from Aurizon's ability to
utilize its milling facilities, management and infrastructure at
Casa Berardi to improve the economics of the Joanna Project; nor
does it consider the excellent exploration potential within
Aurizon's large land position surrounding the Hosco deposit. These
matters will be addressed in the final feasibility study, which has
now been commissioned and is expected to be completed in the fourth
quarter of 2010. "We are very pleased to release the
Pre-feasibility Study on the Hosco deposit." said David P. Hall,
President and Chief Executive Officer. "Due to the dedication and
diligence of Aurizon's technical team and consultants, we have been
able to deliver this study within just three years of optioning the
property and we are proud to see Joanna progress as the next step
in our strategic growth profile, creating shareholder value through
successful exploration and development while continuing to seek out
other worthwhile opportunities for growth." The delivery of the
Pre-feasibility Study completes the first stage of Aurizon's
Continuous Development Program at Joanna, aimed at advancing the
Joanna Project to commercial production, by demonstrating an
economic, environmental and social gain, while mitigating the
technical, financial, and environmental risks of the Project. As
mineral reserves could be affected by permitting and social
acceptance issues, Aurizon held 35 meetings prior to the completion
of the Pre-feasibility Study with various stakeholder groups and
has incorporated most of their views and recommendations into the
current study or as recommendations to be addressed in the final
Feasibility Study. A contract has been awarded to BBA to complete a
final Feasibility Study by the fourth quarter of 2010. Discussions
with stakeholders will resume in order to ensure that the final
Feasibility Study will integrate their views with a view to
providing economical, environmental and social gains for all
concerned parties. You are encouraged to carefully read the section
of this news release entitled "Forward Looking Statements and
Information" below. ADVANTAGES AND OPPORTUNITIES OF JOANNA PROJECT
Matches Aurizon's growth strategy: - The Joanna project is located
in north-western Quebec, a pro-mining jurisdiction, with well
defined environmental and social legislation and controls. - The
project is located along a prolific geological belt, the Abitibi
gold belt and, more specifically, along the Cadillac fault which
hosts the Noranda, Doyon-Laronde, Malartic and Val d'or camps. -
Existing infrastructure crosses the property, including: a main
highway located 950 metres south of the future mine site; 120 kV
hydro power lines located 2.5 kilometres north of the future mine
site; and a natural gas pipe line passes 930 metres south of the
future mine site. - A pool of experienced workforce and suppliers
is available from the city of Rouyn-Noranda, located 20 kilometres
west of the project. - Proximity to Aurizon's Casa Berardi mine,
also located in the Abitibi region, is anticipated to assist in
optimizing the management of both operations. - Excellent
exploration potential within Aurizon's large land position
surrounding the Hosco deposit. Potential synergies with Aurizon's
Casa Berardi operation: - Synergies in the treatment of the
flotation concentrates at Aurizon's Casa Berardi mine operation
that have not been included in the Pre- feasibility Study. They are
as follows: - Metallurgical testwork, utilizing the gold recovery
process planned for the Joanna flotation concentrate, is currently
being performed also on the Casa Berardi ore. Sharing some of the
ore processing facilities for Joanna and Casa Berardi could improve
the economics of both operations, reducing capital and operating
costs. - Testwork and technical studies are currently in progress
at Casa Berardi, with the objective of reducing restoration costs.
Results of these studies will be integrated and applied to the
Joanna concentrate tailings pond design in the final Feasibility
Study. - Sharing of the concentrate tailings pond management with
Casa Berardi could also significantly improve the economics of the
Joanna project. Upside potential to be considered in the
Feasibility Study: - The Pre-feasibility Study lays out an initial
start-up plan for the Joanna Project and is based only on the Hosco
deposit which contains measured and indicated mineral resources of
1.3 million ounces of gold (as described in the attached Appendix).
In addition, the Heva deposit of the Joanna project contains
measured and indicated mineral resources of 257,000 ounces of gold
and the Joanna project (Hosco + Heva) contains inferred mineral
resources of 1.3 million ounces (see news release of March 11,
2009). - In order to increase the upside of the property outside of
the planned pit, Aurizon has commenced a $2.0 million exploration
and infill drilling program on the property. Two surface rigs are
currently active, while a third one is expected to be added before
year end. The results of this program may be incorporated into the
final Feasibility Study. - Infill drilling is testing the potential
extension of the existing pit along the east, west and dip
extensions. - Infill drilling will also test the potential of a
small satellite pit, west of the Hosco deposit, located 700 metres
west of the planned pit location, where historical holes returned
grades of up to 1.8 grams of gold per tonne over 41.5 metres. -
Exploration drilling will test the newly discovered vein system,
located on surface along the Alexandria option property, 300 metres
to the south-east of the future mine site. - Exploration drilling
will test geophysical and geochemical targets defined in the summer
exploration program in an area of 1.5 kilometres surrounding the
future mine site. Upside potential of a rising gold price
environment: - A C$100/oz increase in the gold price results in an
increase of approximately 7.3% in the pre-tax IRR. Strong financial
position expected to assist in the funding of the Joanna project -
While financing of future development of the project is still under
consideration, the Company could finance future development costs
internally from existing cash balances and expected future cash
flow. - Aurizon intends to secure the purchase of used major
equipment prior to the completion of the Feasibility Study.
Conference call Aurizon management will host a conference call and
live webcast for analysts and investors on Wednesday, November 11,
2009 at 12:00 p.m. Pacific Standard Time (3:00 p.m. Eastern
Standard Time) to review the results of the Pre-feasibility Study.
You may access the call by calling the operator at 1-647-259-3568
or toll free access at 1-877-974-0446 ten (10) minutes prior to the
scheduled start time. The call is being webcast and can be accessed
at Aurizon's website at http://www.aurizon.com/ or enter the
following URL into your web browser:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2884860.
Those who wish to listen to a recording of the conference call at a
later time may do so by calling 416-640-1917 or 1-877-289-8525
(Passcode 4182700 followed by the number sign). This playback
version of the call will be available until Wednesday, November 18,
2009. Additional Information The Pre-feasibility Study will be
posted on Aurizon's website at http://www.aurizon.con/ and on SEDAR
at http://www.sedar.com/ within a 45 day period following this news
release. Further details of the Pre-feasibility Study are attached
as an Appendix to this news release. All other material information
previously released on the Joanna project is also available on the
Aurizon website. The Pre-feasibility Study presented to Aurizon was
supervised by Patrice Live, Eng., Mining Manager, of BBA, an
appropriately qualified person as defined by National Instrument
43-101. The technical and scientific information contained in this
news release has been reviewed by Mr Live and Mr. Ghislain
Fournier, Eng., General Manager, Technical Services of Aurizon and
also an appropriately qualified person as defined by National
Instrument 43-101. In addition, all of the qualified persons
mentioned in the Appendix to this news release have also reviewed
the technical and scientific information contained in the news
release. Aurizon is a gold producer with a growth strategy focused
on developing its existing projects in the Abitibi region of
north-western Quebec, one of the world's most favourable mining
jurisdictions and prolific gold and base metal regions, and by
increasing its asset base through accretive transactions. Aurizon
shares trade on the Toronto Stock Exchange under the symbol "ARZ"
and on the NYSE Amex under the symbol "AZK". Additional information
on Aurizon and its properties is available on Aurizon's website at
http://www.aurizon.com/. Forward Looking Statements and Information
This news release contains "forward-looking statements" and
"forward-looking information" within the meaning of applicable
securities regulations in Canada and the United States
(collectively, "forward-looking information"). Specifically, this
news release contains forward-looking statements regarding the
results and projections contained in the Pre-Feasibility study of
the Joanna Gold Project, including estimated mineral resources and
reserves, the expected mine life, recovery, capital costs, cash
operating costs and other costs and anticipated production of the
described open pit mine, the achievement of synergies with
Aurizon's Casa Berardi operation and associated reductions in costs
and optimization of management, the inclusion, incorporation or
integration of the results of certain studies and exploration
activities in a Feasibility Study, the purchase of used major
equipment, the projected internal rate of return, commercial
production of the property, pit design, pit operation design and
production, the projected payback period, the availability and
source of capital for development of the project, sensitivity to
metal prices, ore grade, the resource estimates on the project, the
financial analysis, the completion of a feasibility study on the
Joanna Gold Project, and the timing of commencement and completion
of such a study, timing of discussions with stakeholders and
expected drilling activities, and the business and operations of
Aurizon generally, including the success of Aurizon's planned
growth strategy and increased annual gold production profile,
Aurizon's future cash flow and timing and expectations of future
work programs. The forward-looking information contained in this
news release is made as of the date of this news release and,
except as required under applicable securities legislation, the
Company does not intend, and does not assume any obligation, to
update this forward-looking information. Often, but not always,
forward-looking information can be identified by the use of words
such as "plans", "expects, "is expected", "budget", "scheduled",
"estimates", forecasts", "intends", "anticipates", or "believes",
or the negatives thereof or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved. The
forward-looking information contained in this news release is based
on certain factors and assumptions that the Company believes are
reasonable, including, with respect to mineral resource estimates,
the key assumptions and parameters on which such estimates are
based, as set out in the technical report for the property, that
the current price of and demand for gold will be sustained or will
improve, that the supply of gold will remain stable, that general
business and economic conditions will not change in a material
adverse manner, that financing will be available if and when needed
on reasonable terms, that the Company is able to procure used major
equipment in satisfactory condition and on a timely basis, that the
expected synergies with the Company's Casa Berardi operation are
feasible, the Company is able to achieve those synergies and that
the Company's Casa Berardi operation continues during the life of
mine of the Joanna project (if any), that the results of certain
studies and exploration activities are positive, that the discount
and exchange rates and other variables used in determining the
projected internal rate of return, payback period and other
financial return information in the Pre-feasibility Study are
reasonable, that the Company receives regulatory and government
approvals on a timely basis, that cost estimates used in the
Pre-feasibility Study are reasonable, that the Company's existing
cash balances and expected future cash flow are sufficient to
finance future development of the Joanna project and that estimated
future capital requirements for the Company's other projects and
operations are accurate, that stakeholders are willing and able to
participate in discussions with the Company on a timely basis, that
estimates of future gold production from the Company's other
operations are accurate, and that the Company will not experience
any material accident, labour dispute, or failure of plant or
equipment. However, forward-looking information involves known and
unknown risks, uncertainties and other factors which are beyond
Aurizon's ability to predict or control and which may cause the
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information. Such factors include, among others, conclusions of
economic evaluations, gold price volatility, changes in debt and
equity markets, the uncertainties involved in interpreting
geological data, increases in costs, environmental compliance and
changes in environmental legislation and regulation, interest rate
and exchange rate fluctuations, general economic conditions and
other risks involved in the gold exploration and development
industry, the risk that actual results of exploration activities
will be different than anticipated, that cost of labour, equipment
or materials will increase more than expected, that the future
price of gold will decline, that the Canadian dollar will
strengthen against the U.S. dollar, that mineral resources and
reserves are not as estimated, that actual costs or actual results
of reclamation activities are greater than expected; that changes
in project parameters as plans continue to be refined may result in
increased costs, of unexpected variations in mineral resources and
reserves, grade or recover rates, of failure of plant, equipment or
processes to operate as anticipated, of accidents, labour disputes
and other risks generally associated with mining, unanticipated
delays in obtaining governmental approvals or financing or in the
completion of development or construction activities, as well as
those factors and other risks more fully described in Aurizon's
Annual Information Form filed with the securities commission of all
of the provinces and territories of Canada and in Aurizon's Annual
Report on Form 40-F filed with the United States Securities and
Exchange Commission, which are available on Sedar at
http://www.sedar.com/ and on Edgar at http://www.sec.gov/. Although
the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from
those described in forward-looking information, there may be other
factors that cause actions, events or results to not be as
anticipated, estimated or intended. There can be no assurance that
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Readers are cautioned not to place
undue reliance on forward-looking information due to the inherent
uncertainty thereof. CAUTIONARY NOTE TO U.S. READERS AND INVESTORS
As a British Columbia corporation, the Company is subject to
certain rules and regulations issued by the British Columbia
Securities Commission ("BC Securities Commission"). The Company is
required to provide detailed information regarding its properties
including mineralization, drilling, sampling and analysis, security
of samples and mineral resource and mineral reserve estimates.
Further, the Company describes mineral resources associated with
its properties utilizing terminology such as "measured";
"indicated" or "inferred" which terms are recognized by Canadian
regulations but are not recognized by the United States Securities
and Exchange Commission ("SEC"). Cautionary Note to U.S. Readers
and Investors Regarding Mineral Resources The SEC allows mining
companies, in their filings with the SEC, to disclose only those
mineral deposits they can economically and legally extract or
produce. The Company may use certain terms in this document, such
as "mineral resources", "indicated mineral resources" and "inferred
mineral resources" that are recognized and mandated by Canadian
securities regulators but are not recognized by the SEC. This News
Release uses the term "measured" and "indicated" mineral resources.
U.S. readers and investors are cautioned that while that term is
recognized and required by Canadian regulations, the SEC does not
recognize it. U.S. readers and investors are cautioned not to
assume that any part or all of mineral deposits in this category
will ever be converted into mineral reserves. APPENDIX TECHNICAL
INFORMATION RELATED TO THE PRE-FEASIBILITY STUDY OF THE JOANNA
PROJECT The Pre-feasibility Study lays out an initial start-up plan
for the Joanna Project, and has been built around the mineral
reserve located on the Hosco deposit. Risks raised in the
Preliminary Assessment Report, dated May 22, 2008, also prepared by
BBA (the "Preliminary Assessment Report") have been addressed and
include an updated ore processing flow sheet, which will improve
metallurgical recoveries. Geology The Joanna project is located 20
kilometres east of Rouyn-Noranda, north-western Quebec. Major gold
deposits are usually located in the immediate vicinity of the
Cadillac Break, and centered in different mining camps situated
approximately 20-30 kilometres apart. The Joanna property
represented a void in that sequence. The Hosco deposit is a finely
disseminated sulphide deposit with minor quartz veining located
within a sedimentary basin on both side of a branch of the Larder
Lake Cadillac fault. The mineralized corridor extends along a 2,200
metre east-west trend and can be followed down to a depth of 400
metres. Mineralized zones within that corridor dip by 50 degrees to
65 degrees to the north with a westerly plunge. At the Hosco
deposit, between 1948 and 1949, an exploration shaft was sunk
accessing the upper part of the deposit, from which 45,872 tonnes
grading 6.58 grams per tonne was extracted from 9 shrinkage stopes.
Following the acquisition of the Joanna project, Aurizon carried
out surface diamond drilling which defined large mineralized zones.
Aurizon then evaluated the potential to mine lower grade and higher
tonnage material with different mining methods including by open
pit. This study was followed by infill drilling with the objective
of confirming the grade and continuity of the new mineral
resources. Mineral reserves and resources Mineral resources
included in the Pre-feasibility Study were updated from the
previous resource estimate completed earlier this year ("Resource
modelling and estimation update for the Joanna gold deposit"
prepared by SGS Geostat Ltd., dated April 7, 2009). The new
resource model incorporates the latest drill hole information on
the property completed in 2009, new assay intervals, revised
overburden depth information, new mineralized envelope and a block
solid size compatible with the proposed mining plan of 8 metres
(E-W) x 5 metres (N-S) x 8 metres (Depth). Mineral reserves and
resource estimations have been classified in accordance with
NI43-101. Additional technical information can be found in the
"Technical Report - Resource modeling and estimation update for the
Joanna gold deposit" prepared by SGS Geostat Ltd., dated April 7,
2009, which can be found under Aurizon's profile on
http://www.sedar.com/, as well as on the Aurizon website. HOSCO
DEPOSIT MINERAL RESOURCES AND RESERVES
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Tonnes Grade Gold Ounces (Based on a cut-off grade Grams/ of 0.5
g/t gold) tonne In situ Recovered
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In situ measured mineral resources 19,530,000 1.37 859,000 In situ
indicated mineral resources 10,550,000 1.26 427,000
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Total in situ mineral resources 30,080,000 1.33 1,286,000
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Diluted mineral reserves 23,650,000 1.31 995,600 864,000 Low grade
stockpile (0.3 - 0.5 g/t gold) 2,400,000 0.35 27,000 23,000
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Total mineral reserves 26,050,000 1.22 1,022,600 887,000
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Notes: CIM definitions were followed for mineral resources. Mineral
resources which are not mineral reserves have not demonstrated
economic viability Measured and indicated mineral resources are
reported to a depth of 300 metres and at a cut off grade of 0.5
grams of gold per tonne. Historical production of 9,700 ounces has
not been subtracted from indicated and measured resources. In
addition, inferred mineral resources are estimated at 20.8 million
tonnes at 1.2 grams of gold per tonne for 796,000 ounces. SGS
Geostat constructed the block model, using mineralized envelopes,
at a minimum cut off grade of 0.2 grams of gold per tonne and a
bulk density of 2.66 tonnes per cubic metre. Only measured and
indicated resources were used for the open pit mining plan. A
dilution factor of 5.1% at 0.23 grams of gold per tonne has been
calculated on the basis of the block size, while the mining
recovery was estimated at 97%. Diluted mineral reserves are
estimated at 23.6 million tonnes at 1.3 grams of gold per tonne for
995,600 ounces. In addition, a low grade stock pile of 2,400,000
tonnes averaging 0.35 grams of gold per tonne, containing 27,000
ounces will be processed at the end of the mine life, eliminating
the long term risk for arsenide leaching on the stock pile. Total
gold recovered amounts to 887,000 ounces. Project Assumptions and
Parameters
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Gold price (US$/oz) 825 Exchange rate (C$/US$) 1.10 Wages and
benefits 2008 Canadian Survey and internal database Fuel price
(C$/litre) 0.70 (pit) and 0.85 (transport off- site) Labour force
164 Net smelter royalty 2%
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Discount factors have been applied to supplier's quotes obtained
for certain new equipment, based on the current availability and
market prices of comparable used equipment. This results in a 7%
reduction in the projected Capital Costs for the project. Open Pit
Mine Operation
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Mining sequence 3 phases Waste (million tonnes) 78.1 Overburden
(million tonnes) 9.6 Waste to ore ratio 3.81 :1.0 Annual tonnage
(million tonnes) 13 (year 1 - 2), 17 (year 3 - 6), 6 (year 7 - 8)
Production rate (tonnes per day) 8,500 Inter-ramp pit slope 49
degrees -53 degrees Geotechnical safety berm 15 metres at every 120
metres vertical height Pit size length (1,200 metres), width (540
metres), depth (240 metres)
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The open pit operation will be designed to support an average daily
production rate of 8,500 tonnes, 7 days a week, 365 days per year.
Initial production is expected to be established from a smaller
starter pit and will be extended in two additional push backs. The
zone is covered by 6 to 15 metres of silt and clay overburden. The
waste to ore ratio will average 3.81 over the life of mine with a
maximum of 5.3 in year 3. The pit was designed with a triple
benching arrangement, including a 15 metre geotechnical safety berm
at every 120 metres vertical height. Based on the results of rock
mechanics studies, the recommended inter-ramp pit slope will be 53
degrees for the hanging wall (north) and 49 degrees for the west
and east sectors and the footwall (south). The ore will be trucked
to surface using the ramp, crushed and conveyed to the processing
plant. Surveillance programs will be developed to monitor
environmental performance including the impact on surface and
ground water, noise, dust, vibration, and visual aspects. Proposed
equipment The fleet of equipment will include four to nine 100
short ton class haulage trucks, depending of the mining phase, two
drill rigs, two hydraulic excavators, one front-end loader, two
dozers, one motor grader, one backhoe excavator and six service
trucks and auxiliary equipment. Ore processing
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Milling on-site at Joanna Crushing, grinding, gravity, and
flotation. Milling off-site at Casa Berardi Fine grinding,
atmospheric oxidation and leaching Average recovery (life of mine)
86.8% Tailings ponds (two) 96% of tonnage at Joanna with low
environmental risk (no cyanide, low sulphide) 4% of tonnage at Casa
Berardi (arsenide leaching and acid drainage potential) Milling
rate 8,500 tonnes per day (annualized average rate) Mill
availability 93%
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At Hosco, gold is associated with sulphides, mostly arsenopyrite.
As the material is partially refractory, the selection of an
oxidation method became necessary to achieve a level of gold
recovery that would make the project viable. Processing of the ore
consists of oxidation before cyanidation of a flotation
concentrate. An evaluation comparing conventional pressure
oxidation and sulphide oxidation at atmospheric pressure led to the
selection of the atmospheric process as the preferred method of
oxidation for the Hosco ore. This process uses fine grinding
technology to render the ore amenable to sulphide oxidation at
atmospheric pressure and high temperature. The fine grinding of the
particles and high amount of tension cracks creates multiple
sulphide surfaces available for the oxygen to react. This speeds up
the kinetics, allowing the reaction to be self sustaining at a
lower temperature and therefore operate at atmospheric pressure.
The major advantage of this process is that the lower temperature
and pressure allows a significant reduction in the capital
construction costs. BBA has evaluated various options for
processing, either all the ore or just the flotation concentrate,
at various third party off-site facilities. The impact of potential
synergies was evaluated on an economic, social and environmental
basis. The option of processing Joanna's flotation concentrate at
Casa Berardi was retained for the Pre-feasibility Study.
Transportation costs of the concentrate are mitigated by the
synergy provided by a corporate tailings management strategy
whereby high sulphide and arsenic tailings are disposed in one
common tailings disposal facility at Casa Berardi. Crushing,
grinding, gravity and flotation will be performed on site at
Joanna. Concentrate will be trucked to Casa Berardi where oxidation
and carbon in pulp leaching ("CIP") will be performed.
Metallurgical testwork, performed by SGS Lakefield Research (SGS),
indicates that the addition of a fine grinding and oxidation
circuit prior to leaching increases the projected overall gold
recovery to 86.8%. Following meetings with stakeholders held prior
to the completion of the Pre-feasibility Study, the final
Feasibility Study will review, in greater depth, the impact of
transporting the concentrate to Casa Berardi versus treatment and
disposal of all the tailings at the Joanna site. Tailings ponds As
the project is located at a watershed divide, 3 kilometres west of
an esker and adjacent to a protected land area, Roche Ltd ("Roche")
recommends the construction of two tailings ponds. Approximately
96% of the tails containing low sulphide, low arsenide and no
cyanide will be disposed of at Joanna. A small tailings pond
containing about 4% of the tails composed of the arsenide and
sulphide rich concentrate will be disposed of at Casa Berardi.
Proposed surface infrastructure All the infrastructures have been
clustered and designed to minimize the footprint with the objective
of reducing the impact to the corridor of biodiversity, and include
recommendations from the stakeholders received prior to the
completion of the Pre-feasibility Study. At Joanna, the proposed
mine infrastructure incorporates the following: - A crusher and a
mill complex including grinding, flotation, and filtration circuit;
- A garage complex and associated services and administration
offices; - Electrical distribution installations; - Pit dewatering
system, surface water management and treatment; - Access road to
the site from Highway 117; - The waste dumps will cover 120
hectares with a maximum height of 60 metres. To mitigate arsenide
leaching or acid drainage hazards, two piles will be built. The
first one with very low arsenide content will represent 80% of the
material, while the second one will contain the higher arsenide
material. A safety ditch will be excavated surrounding both piles
to recover run-off water; - The temporary overburden dump will have
a maximum height of 20 metres. This material will be used at the
end of the operation to cover the waste pile and the tailings pond
at Joanna; - The tailings pond complex will cover 270 hectares with
a maximum height of 17 metres, including the tailings disposal pond
and process water pond. All the dams will be constructed during the
preproduction period. At Casa Berardi, the proposed mine
infrastructure incorporates: - A mill complex including fine
grinding, oxidation and leaching (CIP) circuit; - Modification to
the existing gold room; - A new tailings pond, covering 11.8
hectares, for leached concentrate. Restoration A total of $12.6
million has been provided to restore the Joanna site and tailings
pond at Casa Berardi. This includes a provision of $5 million that
will be funded before the production phase to cover the costs of
reclaiming 100% of the footprint generated by the disposal piles
resulting from pre-stripping and dam construction. A progressive
restoration approach will be implemented for the remainder of the
mine life. At Joanna, the overburden disposal area will be
reclaimed, being used as capping material to revegetate waste and
tailings disposal sites. Both piles will be landscaped in
conformity with the regional topography. In addition, following
discussion with stakeholders, the Pre-feasibility considers
creating a lake by diverting existing creeks surrounding the
project, thereby creating a new ecosystem upstream of the
watershed. At Casa Berardi, the tailings pond will be restored
using a multi layer approach, which will isolate the contaminants
from the environment. Project master schedule The Project master
schedule estimates that the pre-stripping and mine site
infrastructure should be completed within an 18 month period
following the completion of the Feasibility Study, the
environmental impact study, the public hearing and permitting. Pre
production Capital costs
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Surface infrastructure $ millions Joanna Ore processing mill
(crushing, grinding, gravity, flotation, cleaning) 76 Casa Berardi
Ore processing (fine grinding, oxidation) 27 Mine site
infrastructure 12 Tailings disposal 8 Mine equipment 18
Pre-stripping 9
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Total Direct Costs 150
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Indirect costs Owner, EPCM and Detailed engineering - 12% 18
Contingency on direct and indirect cost - 11% 19
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Total: 187
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Aurizon has not yet entered into commitments for long-lead items
and, as such, the level of the capital costs estimate is within
+/-25%. As the project has an initial life of mine of 8.3 years,
BBA recommends the purchase of reconditioned equipment, where
applicable. Total capital costs are estimated at $187 million
including $150 million of direct cost. Owner costs, EPCM and
detailed engineering have been estimated at 12%. An average
contingency of 11% has been provided on direct and indirect costs.
Sustaining capital expenditure over the operation's mine life is
estimated at $31 million including the purchase of additional
equipment and tailings pond management. Operating costs
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$/tonne milled ------- Mine 7.00 ($1.75/tonne mined) Transport 0.95
Mill 7.57 (Joanna-$5.36/tonne, Casa Berardi-$2.21/tonne)
Administration 0.73 ---- Total: 16.25 -----
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The life of mine average cash cost, before royalties, is estimated
at US$434 per ounce, using a Canadian $ to U.S. $ exchange rate of
1.10. Operating costs and blasting costs are based on supplier's
budgeted prices and a fuel price of $ 0.70 per litre. Average
salaries are based on the 2008 Canadian Mine Salaries and Wages
Survey results for similar size mining operations. SENSITIVITY
ANALYSIS
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Internal % Change Rate in Value Variation of Return
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+ 10% US$908 21.0% Gold price - base case - US$825 14.4% - 10%
US$743 6.8%
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+ 10% 1.21 21.0% Exchange rate - base case - 1.10 14.4% - 10% 0.99
6.8%
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+ 10% 0.77 14.0% Fuel - base case - 0.70 14.4% - 10% 0.63 14.7%
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+ 5% 91.1% 17.8% Metallurgical recovery - base case - 86.8% 14.4% -
10% 78.1% 6.8%
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+ 15% US$499 8.7% Cash operating costs/ounce - base case - US$434
14.4% - 15% US$369 19.3%
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+ 15% $216M 9.8% Capital costs - base case - $188M 14.4% - 15%
$160M 20.1%
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STAKEHOLDER SENSITIVITY ASSESSMENT Prior to the completion of the
Pre-feasibility Study, individual meetings and dialogue workshops,
resulted in a total of 177 proposals and comments which have been
integrated within specific recommendations included in the
Pre-feasibility Study, and which will be addressed during the
Feasibility Study. All comments were considered while the most
sensitive comments were as follows: Open pit operation - Potential
impact on water table and private wells caused by vibration will be
reduced by the implementation of a continuous monitoring system. -
Impact of noise will be reduced by the use of noise barriers. -
Impact of dust will be reduced by the use of dust suppressants on
roads, profiling of waste rock piles according to prevailing winds,
and maintaining humid tailings and spruce screens to collect dust.
- Visual impact will be reduced by using the natural landscape and
with preservation of large trees on the extremity. - Simulation and
monitoring systems will be implemented for the benefit of
stakeholders. Water management - Potential impact on water wells
caused by water contamination risks will be reduced by the
installation of monitoring wells and a follow up of the underground
water flow and quality. - While the project is located at the
watershed divide, the infrastructure is located within the same
drainage basin. While the esker located east of the project is part
of the contingency plan for the Rouyn Noranda community, the
project is located downstream within a different watershed. - As
the waste pile might have a risk of arsenide leaching, a water
diversion canal will be excavated surrounding the pile where a
water treatment plant can be installed if required. Road traffic -
As the access road to the project is located at the top of a small
hill, the entrance road to the property will be reviewed. - The
Feasibility Study will address the global impact of transportation
between the two sites on traffic and on the public road system.
Proximity of the biodiversity reserve - Joanna is located within a
peat bog area between the Aiguebelle biodiversity reserve and the
Vaudray Joannes protected land area, both being linked by a wide
corridor of biodiversity expressed by a north south trending esker,
east of the proposed project, which represents a source of fresh
water. - Based on the discussions with stakeholders, the
restoration plan should envisage compensating the loss of the humid
area by improving knowledge with respect to the underground water
source of the esker and therefore securing the corridor of
biodiversity located east of the property. RECOMMENDATIONS FOR
FEASIBILITY STUDY BBA recommends that the following studies be
performed in the preparation of the Feasibility Study. Permitting -
Initiate permitting process, including resuming meetings with
stakeholders. Capex - Advance the detailed engineering and optimise
certain critical areas of mill, plant and infrastructure. - Secure
purchase of major equipment components. Mineral resources -
Increase mineral resources through drilling outside of the Hosco
pit. Mining - Review of cut-off grade strategy for marginal grade
material. - Update of mining plan with satellite deposits following
completion of additional drilling. - Evaluate the possibility of
contract mining. Technical parameters - Confirming geotechnical and
hydrogeological parameters. Metallurgy - Confirming metallurgical
recovery. - Pre pilot test for flotation and oxidation. - Pilot
test for the whole process (8 tonnes) using samples taken from
drill core. - Detailed study of off site versus on site milling
options. Restoration - Complete a block model on the arsenic
content of the waste material. Quality Control Mineral reserve and
resource estimates, implementation and the quality control program
for the Joanna project are supervised by Ghislain Fournier, Eng.,
General Manager, Technical Services of Aurizon Mines Ltd., and a
Qualified Person under National Instruments 43-101. Additional
technical information can be found in the "Technical Report -
Resource modeling and estimation update for the Joanna gold
deposit" prepared by SGS Geostat Ltd., dated April 7, 2009, which
can be found under Aurizon's profile on http://www.sedar.com/, as
well as on the Aurizon website. Qualified Persons for
Pre-feasibility Study The Pre-feasibility Study was prepared by
leading independent industry engineering firm and consultants, all
Qualified Persons under National Instruments 43-101, with the
collaboration of the Aurizon technical Group. BBA Inc. Patrice
Live, Eng. Mining Manager (mineral reserve, pit design, mine
planning, mining operating and capital cost, financial analysis,
stakeholder meeting) and Angelo Grandillo, Eng. (metallurgical
testworks, ore processing, milling operating and capital cost).
Golder, Luiz Castro, Ph. D., P. Eng. (rock mechanic, mining pit
slopes, geotechnical study). Roche, Andre Vachon, M.Sc. vice
president (environment, restoration, operating and capital cost
estimates, stakeholder meetings). SGS-Geostat Ltd., Michel Dagbert.
Eng. (mineral resources). DATASOURCE: Aurizon Mines Ltd. CONTACT:
AURIZON MINES LTD., David Hall, President and C.E.O., Telephone:
(604) 687-6600, Toll Free: 1-888-411-GOLD, Fax: (604) 687-3932;
Michel Gilbert, Executive Vice President, Operations, Telephone:
(819) 874-4511, Fax: (819) 874-3391, Web Site:
http://www.aurizon.com/, Email: ; or Renmark Financial
Communications Inc., 2080 Rene-Levesque Blvd., West Montreal, QC,
H3H 1R6; Barry Mire: ; Maurice Dagenais: ; Media: Valerie Lacasse:
, Tel: (514) 939-3989, Fax: (514) 939-3717
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