Abacus Mining & Exploration Corp. (TSX VENTURE: AME) (the
"Company") is pleased to announce the completion of a positive,
independent Preliminary Economic Assessment ("PEA") for the
Company's copper-gold Ajax property, adjacent to the past producing
Afton Mine, located near Kamloops, British Columbia.
The National Instrument 43-101 ("NI 43-101") compliant study was
completed by Wardrop, a Tetra Tech Company ("Wardrop"), and
contains production parameters, capital costs, operating costs, and
other financial projections for an open pit mine processing 60,000
tonnes of mill feed per day. The metal prices used for the base
case were US $2.00 per pound copper and US $700 per ounce gold.
Base Case Highlights (All figures in US dollars and pre-tax)
- Net present value of $192.7 million discounted at 8%
- Return on initial capital expenditures of $535 million is
40.4%
- Average life of mine cash costs of $1.17 per pound copper net
of gold credit at $700 per ounce
- Average annual production estimated at 106 million pounds of
copper and 99,400 ounces of gold in concentrate
- Mine life of approximately 23 years
- The pit inventory resource contains 2.6 billion pounds of
copper and 2.4 million ounces of gold in the measured and indicated
category
Doug Fulcher, President of Abacus states, "We are extremely
pleased with the results of this PEA as it confirms our confidence
in the economic viability of the Ajax project. In addition to the
quality resource, the location of this project and existing
infrastructure gives it a tremendous advantage. The tailings
storage facility is ready to be re-activated with little effort.
Water and power are readily available, along with access to major
trucking routes and railways. We look forward to providing long
term quality employment opportunities and economic stimulus for the
city of Kamloops and surrounding areas. We anticipate that mine
startup could happen as early as 2013.
We will now move aggressively to complete a prefeasibility study
on the Ajax deposit by the end of 2009. Over the next few months,
additional drilling is planned on the Ajax East extension area
intended to convert inferred resources into a measured and
indicated status for inclusion in the prefeasibility study. Results
of this drilling could also add additional tonnes of higher grade
material and improve the economics shown in this PEA. Moreover, we
will continue to look at the exploration potential of the nearby
Rainbow and DM zones, both of which are open in one or more
directions."
The following sensitivity tables provide net present value,
internal rate of return, return on initial capital and payback
period data at a discount rate of 8%:
-----------------------------------------------------------------------
Copper price ($/pound)
Net Present Value (M$@8%) ------------------------------------
2.00 2.25 2.50
-----------------------------------------------------------------------
700 192.7(ii) 442.7 692.8
------------------------------------
Gold price 800 282.5 532.5 782.6
($/ounce) ------------------------------------
900 372.3 622.3 872.4
-----------------------------------------------------------------------
(ii) Base Case
-----------------------------------------------------------------------
Copper price ($/pound)
Return on Initial Capital (%)(i) ------------------------------------
2.00 2.25 2.50
-----------------------------------------------------------------------
700 40.4(ii) 92.8 145.2
------------------------------------
Gold price 800 59.2 111.6 164.1
($/ounce) ------------------------------------
900 78.1 130.5 182.9
-----------------------------------------------------------------------
(i) The return on initial capital is the ratio between the Net Present
Value of the free cash flows and the Present Value of the initial
project investment, both discounted at 8%
(ii) Base Case
-----------------------------------------------------------------------
Copper price ($/pound)
Internal Rate of Return (%)(i) ------------------------------------
2.00 2.25 2.50
-----------------------------------------------------------------------
700 12.4(ii) 17.5 22.2
------------------------------------
Gold price 800 14.3 19.2 23.8
($/ounce) ------------------------------------
900 16.1 20.9 25.4
-----------------------------------------------------------------------
(i) Internal rate of return (IRR) is the annualized effective
compounded return rate which can be earned on invested capital
(ii) Base Case
-----------------------------------------------------------------------
Copper price ($/pound)
Payback (years) ------------------------------------
2.00 2.25 2.50
-----------------------------------------------------------------------
700 6.5(ii) 5.3 3.8
------------------------------------
Gold price 800 6.0 4.9 3.4
($/ounce) ------------------------------------
900 5.6 4.3 3.0
-----------------------------------------------------------------------
(ii) Base Case
The following table presents the cash cost per pound of copper
which includes all site operating cost, concentrate shipping cost
and concentrate smelting cost offset by a credit for payable gold
production:
----------------------------------------------------------
Gold Price ($/ounce) 700 800 900
----------------------------------------------------------
Cash cost ($/pound of Copper) 1.17(ii) 1.08 0.99
----------------------------------------------------------
(ii) Base Case
Mining and Milling
A detailed open pit mine plan was completed to supply 21.9
million tonnes of ore per year (60,000 tonnes per day) to the mill.
The mine life is approximately 23 years and has an average strip
ratio of 1.7:1 (waste tonnes: mill feed tonnes). The open pit was
designed with 12 metre benches and pit slopes adjusted to comply
with the geotechnical analysis. The ore and waste will be drilled
for blasting utilizing electric drills capable of drilling 311
millimetre diameter blast-holes. Blasted material will then be
loaded into 228 tonne haul trucks with 35 cubic metre electric rope
shovels and 19 cubic metre front-end loaders.
The ore will be delivered to a 60 inch x 89 inch gyratory
primary crusher. The crushed ore will feed to a conventional copper
concentrator. The concentrator design includes a single 40 foot x
25 foot SAG mill followed by two 24 foot x 42 foot ball mills.
Copper and gold are then recovered in concentrate through a
conventional flotation circuit. The concentrate will then be
filtered and shipped by rail to the port in Vancouver. Metal
production in concentrate is estimated at approximately 106 million
pounds of copper and 99,400 ounces of gold per year.
Metallurgical recovery equations were based on a series of
lock-cycle recovery tests performed by G&T Labs of Kamloops,
B.C. The expected recoveries were determined to be 81.5% copper and
81.1% gold providing a 25% copper concentrate at the average mill
feed grade. Further metallurgical testing will be carried out in
conjunction with the prefeasibility work.
Location and Infrastructure
The Ajax property is favorably situated in south-central British
Columbia, approximately 10 kilometres from the city of Kamloops.
The local economy is largely resource and service oriented with a
major emphasis on forestry, mining, agriculture, and ranching. The
city is a central trading hub to a region with population of
127,000 with established transportation routes and communication
infrastructure.
The infrastructure that presently exists near the Ajax property
is significant. The property is surrounded by two major highways
and rail lines with direct access to deep sea ports. Power and
water are also readily available, with both running up to the
historic Afton mine camp that was operated by Teck between the
1970s and 1990s.
On the property, access is gained by haul roads constructed by
Teck in the 1980s. The haul roads connect the Ajax area to the
Company's tailings storage facility, and to other high priority
targets in the Afton area, including the Rainbow and DM zones.
Capital
The total capital cost to commence production is estimated at
$535 million. Included in the capital estimate are costs for the
initial mining equipment, pre-production stripping, a 60,000 tonnes
per day copper concentrator, shop, warehouse, infrastructure and
indirect costs associated with the design engineering procurement
and construction, commissioning, spare parts, contingency and
owner's cost. The costs also include the initial expansion of the
existing tailings facility. All capital costs are estimated to an
accuracy of + 25% / -5%.
Environmental
In preparation for permitting an environmental baseline study
was completed to assess the current environmental status across the
mine site. The study includes evaluation of the flora and fauna,
ground and surface water quality and static testing for acid
generating potential. The study concluded that no significant
issues are present that would impede the permitting process. The
static testing for acid generating suggested the material to be
mined is not acid generating. Kinetic testing is scheduled for
completion during the upcoming pre-feasibility study.
Resource
The resource estimate is based on 411 exploration drill holes,
with more than 140,000 metres completed in the Ajax West, Ajax East
and the New Gold joint venture ground in between. The mineral
resources of the Ajax deposit were classified in accordance with
CIM Definition Standards and Best Practices referred to in NI
43-101 which have a reasonable expectation of economic extraction.
The mineralization of the Project satisfies criteria to be
classified into Measured, Indicated and Inferred mineral resource
categories. The updated mineral resource estimate for the Ajax
deposit was performed by Mr. Thomas C. Stubens, (M.A.Sc., P.Eng),
Senior Geologist at Wardrop.
The table below presents the estimate of the resource of the
Ajax deposit as at June 17, 2009. At a 0.13% copper equivalent
cut-off, the Measured and Indicated resource totals 442 million
tonnes at an average grade of 0.30% copper and 0.19 g/t gold, with
an additional 80.6 million tonnes of Inferred at 0.22% copper and
0.16 g/t gold.
Ajax Deposit - Estimated Mineral Resource:
---------------------------------------------------------------
Contained
(i) Metal
Cutoff Tonnes Cu Au CuEq Cu Au
CuEq (%) (Mt) (%) (g/t) (%) (M lb) (Koz)
---------------------------------------------------------------
---------------------------------------------------------------
Measured 0.13 231 0.30 0.18 0.32 1,527.3 1,364
Indicated 0.13 211 0.29 0.19 0.32 1,367.7 1,287
---------------------------------------------------------------
Measured + 0.13 442 0.30 0.19 0.32 2,895.0 2,651
Indicated
---------------------------------------------------------------
---------------------------------------------------------------
Inferred 0.13 81 0.22 0.16 0.24 391.0 404
---------------------------------------------------------------
(i) Copper equivalency based on metal prices of $2.00/lb Cu and
$700 /oz Au, at a copper recovery of Cu Recequals43.619 x
Cu(%) + 63.002, max value equals 92%, and gold recovery of Au
Recequals33.87 1 x Au(g/t) + 75.29, max value equals 90%. These
were the metal recoveries developed during the preparation of
the PEA. The Copper Equivalent (CuEq) was calculated using the
following formula: CuEq equals (Cu_Val + Au_Val) / (22.0462 x Cu
price $/lb) where: Cu_Val equals Cu(%) x Cu_Rec x Cu_price x
22.0462 and Au_Val equals Au(g/t) x Au_Rec x Au_Price x 0.032151
A block model was created from the drill data, and conceptual
pit shells were generated using the Lerchs-Grossmann algorithm. The
resource was then estimated within the ultimate designed pit, and
summarized in the following table, at a US$3.84/t Net Smelter
Return ("NSR") cut-off grade. This estimated pit inventory resource
is the basis of the PEA mine plan and financial analysis.
Ajax Deposit - Estimated Pit Inventory Resource:
---------------------------------------------------------------
Contained
Cutoff (i) Metal
NSR Tonnes Cu Au NSR Cu Au
($/t) (Mt) (%) (g/t) ($/t) (M lb) (Koz)
---------------------------------------------------------------
---------------------------------------------------------------
Measured 3.84 231 0.29 0.18 11.32 1,454.8 1,300
Indicated 3.84 193 0.27 0.18 10.93 1,153.6 1,100
---------------------------------------------------------------
Measured + 3.84 424 0.28 0.18 11.14 2,608.4 2,400
Indicated
---------------------------------------------------------------
---------------------------------------------------------------
Inferred 3.84 78 0.21 0.15 8.28 357.5 400
---------------------------------------------------------------
(i) NSR based on metal prices of $2.00/lb Cu and $700 /oz Au, at
a copper recovery of Cu Recequals32.591xCu(%)+72.732, max 92%,
and gold recovery of Au Recequals33.871xAu(g/t)+75.29, max 90% .
These were the metal recoveries developed during the preparation
of the PEA.
This assessment is preliminary in nature and includes inferred
mineral resources that are considered too speculative geologically
to have economic considerations applied to them to be categorized
as mineral reserves, and there is no certainty that the preliminary
assessment will be realized. Approximately 15.5% of the mineral
resources in the mine production plan are classified as inferred.
Mineral resources are not mineral reserves and do not have
demonstrated economic viability. There are no known environmental,
permitting, legal, title, taxation, socio-political, marketing or
other relevant issues which may materially affect the mineral
resource.
Approximately 80% of the resource is located on land 100% owned
by the Company. The remaining 20% of the resource is located within
the ground covered by a joint venture with New Gold, Inc. As
previously announced (October 30, 2007), interests in the joint
venture down to 500 metres below surface are 60% Abacus and 40% New
Gold. New Gold will have 90 days from receipt of the PEA report to
elect to either accept agreed terms, or revert to a 10% net profits
interests.
Qualified Person
The NI 43-101 Technical Report is being prepared by an
integrated engineering team led by Wardrop of Vancouver, B.C.,
Canada as the primary author of the Technical Report, conducted
under the overall review of Mr. Hassan Ghaffari, P.Eng., of
Wardrop, a Qualified Person under the standards set forth under NI
43-101. The technical report will be filed on SEDAR within 45 days.
Further information regarding geology, sampling methods, data
verification, QA/QC and assay lab is provided in the NI 43-101
technical report dated January 14, 2009 and currently filed on
SEDAR (www.sedar.com).
Co-Authors
- Ryan Ulansky (P.Eng.), Senior Mining Engineer, AMEC Americas
Ltd. - Qualified Person for mining
- H. Warren Newcomen (P.Eng.), Senior Geotechnical Engineer, BGC
Engineering Inc. - Qualified Person for pit slope stability
- Bruno Borntraeger (P.Eng.), Senior Project Engineer, Knight
Piesold, - Qualified Person for tailings dam design
- Robert G. Friesen (P.Geo.), the Company's Senior Exploration
Manager, is the Qualified Person for the purposes of NI 43-101 with
respect to preparation and review of this press release
On Behalf of the Board
ABACUS MINING & EXPLORATION CORP.
Doug Fulcher, President and Chief Executive Officer
Forward-Looking Information
This release includes certain statements that may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical facts, that address events or
developments that Abacus Mining and Exploration Corp. (the
"Company") expects to occur, are forward-looking statements.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
that events or conditions "will", "would", "may", "could" or
"should" occur. Although the Company believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and actual results may differ materially from
those in the forward-looking statements. Factors that could cause
the actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, and continued availability of capital and
financing, and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements.
Forward-looking statements are based on the beliefs, estimates and
opinions of the Company's management on the date the statements are
made. The Company undertakes no obligation to update these
forward-looking statements in the event that management's beliefs,
estimates or opinions, or other factors, should change.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Abacus Mining and Exploration Corp. Tim Mikula
Investor Relations 866-834-0301 604-682-0307 (FAX)
info@amemining.com www.amemining.com
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