TORONTO, ONTARIO (TSX: CSM.WT)(AMEX: SMC)(the "Company") today
reported results of a feasibility study on the Orosi Mine located
in Nicaragua (the "Feasibility Study"), including economic
forecasts and independently prepared Mineral Resource and Mineral
Reserve estimates. The Company is currently converting the Orosi
Mine from a heap leach operation to a conventional milling
operation. The Feasibility Study was commissioned by Scott Wilson
Roscoe Postle Associates Inc. and all figures are as at January 31,
2008; the date the models were run and calculated.
"We are very pleased with the robust economics demonstrated by
the Orosi Mine feasibility study," said Peter Tagliamonte,
President and Chief Executive Officer. "The exploration potential
and the opportunity to grow the reserves and resources represent a
tremendous additional upside for the Orosi Project. The operations
team is doing an excellent job and construction is progressing
well. We expect production at the Orosi Mine to start in the first
quarter of 2009."
Feasibility Study Highlights
- Proven and Probable Mineral Reserves have been estimated by
Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA"),
totaling 11.0 million tonnes (Mt), at a grade of 1.44 g/t Au,
containing 510,000 ounces of gold
- The average cash operating costs from the open pit mine are
estimated at $405 per ounce gold, not including royalties and
taxes; Life of mine average cash operating cash costs, including
reprocessing of spent ore after open pit mining is completed, would
be $441 per ounce gold, not including royalties and taxes
- After-tax IRR for the Project going forward from January 31,
2008 is estimated at 62%, with an after-tax NPV of $89 million
discounted at 0% and an after-tax NPV of $67 million discounted at
5% (capital expenditures to January 31, 2008 considered as
sunk)
- Initial capital costs of $41.2 million, of which $12.8 million
has been spent as at January 31, 2008. Life of mine sustaining
capital costs are estimated at $5.6 million with net cash flow from
operations of $123 million over the 7.5 year mine life
- An independently prepared report, compliant with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101"), will be filed on SEDAR shortly, providing details of the
Mineral Reserve estimate and economic model
Orosi Project Economics
The following inputs were considered in the economic
forecast:
- Mineral Reserves of 11.0 Mt, at a grade of 1.44 g/t Au,
consisting of
-- 6.1 Mt of open pit ore, at a grade of 1.91 g/t Au, and strip
ratio of 6.0 to 1
-- 4.9 Mt of spent ore (previously leached material), at a grade
of 0.85 g/t Au.
- Production starting in Q1 2009
- Production of 1.5 Mt milled per year (4,200 tonnes per day)
for the first 5.5 years, consisting of 3,500 tpd open pit ore, plus
700 tpd spent ore
- Production of 1.8 Mt milled per year (5,000 tonnes per day)
for two additional years, consisting entirely of spent ore
- Mill recovery is 90% for open pit ore, and 80% for spent
ore
- Gold price declining from near-current prices to long-term
forecasts over time
-- $800 per ounce for 2009 to 2011, and
-- $750 per ounce thereafter.
- Mine life capital totals $46.8 million, consisting of
-- $12.8 million in sunk costs, as of January 31, 2008
-- $28.4 million in pre-production capital
-- $5.6 million in sustaining capital over the entire mine
life
- Average operating cost over the mine life is $17.61 per tonne
milled
- Average cash cost over the mine life is $441 per ounce, not
including taxes and royalties
-- $405 per ounce for 2009 to 2013 (open pit mining)
-- $580 per ounce for 2014 to 2013 (processing of spent ore)
Based on the stated assumptions, net present values and internal
rates of return using base case and approximate current spot prices
for gold are as follows:
ECONOMIC FORECAST RESULTS
Item Units Base Case Spot Case
----------------------------------------------------------------------------
Average Gold Price $/oz 767 900
Total Project NPV@5% $ millions 51.3 90.3
Total Project IRR % 34.3% 48.8%
Going Forward NPV@5% $ millions 66.7 107.6
Going Forward IRR % 62.0% 85.4%
Orosi Mineral Reserve and Mineral Resource Estimates
Mineral Reserve and Mineral Resource estimates were prepared by
Scott Wilson Roscoe Postle Associates Inc. ("Scott Wilson RPA").
Mineral Reserves consist of open pit designs for an expansion of
the existing Mojon pit, new pits in the Crimea and Santa Maria
areas, and spent ore sources included in the Life of Mine Plan.
MINERAL RESERVE ESTIMATE - JANUARY 31, 2008
Location Probable Reserves
'000 t g/t Au oz Au
----------------------------------------------------------------------------
Mojon 2,978 1.66 158,700
Crimea 2,210 1.98 140,500
Santa Maria 917 2.56 73,400
Spent Ore 4,912 0.85 134,900
----------------------------------------------------------------------------
TOTAL 11,017 1.44 509,500
Notes:
1. CIM definitions were followed for Mineral Reserves.
2. Mineral Reserves were estimated at a block cut-off grade of 0.72 g/t Au.
3. Mineral Reserves were estimated at an average long-term gold price of
US$625/oz.
4. A selective mining unit of 6.25 m x 6.25 m x 6.00 m was used, with
grades diluted to full blocks of that size.
5. Numbers may not add due to rounding.
Mineral Resources were estimated exclusive of (in addition to)
Mineral Reserves. They consist of small amounts of Inferred
Resources within the reserve pit design, Indicated and Inferred
Resources outside the reserve pit design, and spent ore resources
that have been classified as Inferred.
MINERAL RESOURCE ESTIMATE - JANUARY 31, 2008
Location Indicated Resources Inferred Resources
'000 t g/t Au oz Au '000 t g/t Au oz Au
----------------------------------------------------------------------------
Mojon 2,311 1.36 101,200 76 1.46 3,600
Crimea 1,629 1.56 81,900 147 1.65 7,800
Santa Maria 187 2.90 17,400 7 2.27 500
Spent Ore 3,140 0.70 70,700
----------------------------------------------------------------------------
TOTAL 4,126 1.51 200,400 3,371 0.76 82,600
Notes:
1. CIM definitions were followed for Mineral Resources.
2. Mineral Resources were constrained within a preliminary open pit shell.
3. Mineral Resources were estimated at a cut-off grade of 0.56 g/t Au.
4. Mineral Resources were estimated at an average long-term gold price of
US$800/oz.
5. Numbers may not add due to rounding.
Qualified Persons
Graham Speirs, P. Eng., COO for Central Sun Mining, is the
Qualified Person responsible for the disclosure as defined by NI
43-101. The internal quality control information were reviewed and
verified by Mr. Speirs. Mr. Speirs has read and approved this news
release.
Jason Cox, P. Eng., Supervisor of Mine Engineering for Scott
Wilson RPA, is the Qualified Person with overall responsibility for
the disclosure of Feasibility Study economic results, and Mineral
Reserve estimates, as defined by NI 43-101. Mr. Cox has read and
approved this news release.
About Central Sun Mining
The Company is a growing gold producer with mining and
exploration activities focused in Nicaragua. The Company operates
the Limon Mine in Nicaragua and is converting the Orosi Mine in
Nicaragua to conventional milling to increase the annual gold
output. It also holds an option to acquire a 100% interest in the
Mestiza gold property which is located 70 kilometres east of the
Limon Mine. The Company is focused on efficient and productive
mining practices to establish high quality and cost effective
operations. Central Sun Mining is committed to growth by optimizing
current operations, expanding mineral reserves and resources at
existing mines as well as exploring its extensive land
holdings.
Cautionary Note Regarding Forward-Looking Statements: This press
release contains "forward-looking statements", within the meaning
of the United States Private Securities Litigation Reform Act of
1995 and applicable Canadian securities legislation.
Forward-looking statements include, but are not limited to,
statements with respect to the completion of the Company's new
strategic plan, the future financial or operating performance of
the Company, its subsidiaries and its projects, the future price of
gold, estimated recoveries under the milling plan, the estimation
of mineral reserves and resources, the realization of mineral
reserve estimates, the timing and amount of estimated future
production, costs of production, capital for the mill project,
operating and exploration expenditures, costs and timing of the
development of new deposits, outcome, costs and timing of future
exploration, requirements for additional capital, government
regulation of mining operations, environmental risks, reclamation
expenses, title disputes or claims, limitations of insurance
coverage and the timing and possible outcome of pending litigation
and regulatory matters. Generally, these forward-looking statements
can be identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be
achieved".
Forward-looking statements are subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of the
Company to be materially different from those expressed or implied
by such forward-looking statements, including but not limited to:
general business, economic, competitive, political and social
uncertainties; the actual results of current exploration
activities; actual results of reclamation activities; conclusions
of economic evaluations; changes in project parameters as plans
continue to be refined; future prices of gold; possible variations
of ore grade or recovery rates; failure of plant, equipment or
processes to operate as anticipated; accidents, labour disputes and
other risks of the mining industry; political instability,
insurrection or war; delays in obtaining governmental approvals or
required financing or in the completion of development or
construction activities, as well as those factors discussed in the
section entitled "General Development of the Business - Risks of
the Business" in the Company's annual information form for the year
ended December 31, 2007 on file with the securities regulatory
authorities in Canada and the Company's Form 40-F on file with the
Securities and Exchange Commission in Washington, D.C. Although the
Company has attempted to identify important factors that could
cause actual results to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. The Company
does not undertake to update any forward-looking statements that
are incorporated by reference herein, except in accordance with
applicable securities law.
Cautionary Note to U.S. Investors Concerning Estimates of
Measured, Indicated or Inferred Resources
The information presented uses the terms "measured", "indicated"
and "inferred" mineral resources. United States investors are
advised that while such terms are recognized and required by
Canadian regulations, the United States Securities and Exchange
Commission does not recognize these terms. "Inferred mineral
resources" have a great amount of uncertainty as to their
existence, and as to their 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 other economic studies. United States
investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States investors are also cautioned not to
assume that all or any part of an inferred mineral resource exists,
or is economically or legally mineable.
Contacts: Central Sun Mining Inc. Andre Bharti Investor
Relations (416) 860-0919 (416) 367-0182 (FAX) Email:
ir@centralsun.ca
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