Abacus Mining & Exploration Corporation (TSX VENTURE:AME) ("Abacus") is pleased
to announce the results of the Feasibility Study ('FS') for the Ajax Copper-Gold
Project (the "Ajax Project") located southwest of Kamloops, B.C. The Ajax
Project is being developed through KGHM Ajax Mining Inc. ("KGHM Ajax"), owned
49% by Abacus and 51% by KGHM Polska Miedz S.A. ("KGHM"). The NI 43-101
Technical Report will be available on the Company's website (www.amemining.com)
and on SEDAR (www.sedar.com).
Base Case Highlights: (all economic figures in US$)
-- Total proven and probable mineral reserves of 3 billion lbs Cu and 2.7
million ozs Au at 0.27% Cu and 0.17 g/t Au based on $2.50 Cu and $1,085
Au
-- 23 year mine life at a processing rate of 60,000 t/d or 21.9 million
t/a at a LOM stripping ratio of 2.4:1
-- LOM production of 2.5 billion lbs Cu and 2.28 million ozs Au in
concentrate
-- Initial capital costs of $795 million, including contingency of $87
million
-- Cash cost per lb of copper of $1.28 net of gold credits
Economic Analysis:
The base case economic analysis produced by Wardrop, a Tetra Tech Company (Tetra
Tech) projects that the Ajax Project will have a pre-tax net present value of
$416 million (@ 8% discount rate) and internal rate of return of 14.5% based on
pre-tax 100% equity financing. The pre-tax economic results for the base case
and additional case scenarios are presented in the following table.
Table 1: Summary of Ajax Project Pre-Tax Economic Results
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Alternate Alternate
Base Case Case Case
Scenario Scenario1 Scenario2
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Cu US$/lb $2.75 $3.00 $ 3.50
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Au US$/oz $1,085 $1,300 $1,700
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Exchange Rate (US$:C$) 0.92 0.94 0.98
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Pre-tax Internal Rate of Return 14.5% 19.5% 30.3%
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Cash Cost per lb Cu
(net of gold credits) $1.28 $1.11 $0.79
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Pre-Tax Net Present Value
(8% discount rate) $416 million $818 million $1,601 million
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Payback Years 7.8 3.8 2.2
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James D. Excell, President & CEO of Abacus, commented, "The FS confirms the
economic viability of the Ajax Project at long term copper and gold prices, and
demonstrates the leverage to increases in metal prices. At recent market prices
the Project is very robust and the NPV nearly quadruples from the base case with
an associated 2.2 year payback of initial capital.
The delivery of the FS is a pivotal milestone for Abacus and advances the Ajax
Project along the critical path to production start-up targeted for 2015. The
Ajax Mine economics compare very favorably to the leading copper projects being
developed around the world given its long-life, location, open-pit mining and
conventional processing. The mine also represents a small portion of the 8,000
hectare copper-gold camp. We look forward to developing the Ajax Project with
our world class partner, KGHM."
Joint Venture Next Steps
Upon deemed delivery of the FS to KGHM, expected on or about December 31, 2011,
KGHM will have a maximum of 90 days to acquire a further 29% in the Joint
Venture company for a cash consideration equal to 29% of the Proven and Probable
copper equivalent reserve in the FS, to a maximum of US$35 million, towards use
by Abacus for its share of project capital. Thereafter, KGHM will arrange the
financing for its (80%) proportionate interest in the project capital, and
Abacus has the option to arrange its own financing for its (20%) proportionate
interest or elect to have KGHM do so on commercially reasonable terms.
In the event that KGHM chooses not to increase its interest in the joint
venture, Abacus then has 90 days to elect to purchase KGHM's 51% interest for
US$37 million, and 90 days thereafter to close on this purchase. Should Abacus
choose not to purchase KGHM's interest in its entirety, Abacus' interest in the
Joint Venture can be increased to 51% by paying approximately US$1.5 million to
KGHM.
Detailed FS Summary
The independent Ajax Project Feasibility Study which was commissioned in May
2010 in accordance with National Instrument 43-101, supports a 60,000 tonne per
day conventional milling plant, producing a copper-gold concentrate containing
25% Cu and 18 g/t Au. The Study was led by Tetra Tech as the project's lead
consultant, in conjunction with a team of globally recognized consultants:
Tetra Tech - overall management, mineral processing,
infrastructure, and financial analysis
AMEC Americas Ltd. - geology, mineral resource estimate,
mineral reserve estimate, and mine design
Knight Piesold Ltd. - environmental studies, permitting, and
social or community impact
Golder Associates Ltd. - tailings handling, thickening and
tailings area water management
BGC Engineering Inc. - pit slope designs and site geotechnical
investigation
G&T Metallurgical Services Ltd. - metallurgical test work
Krupp Polysius - High Pressure Grinding Rolls (HPGR) pilot
test work for the process design
The FS encompasses trade-off studies that were performed to optimize
life-of-mine operations since the July 31, 2009 Preliminary Economic Assessment
(PEA). Since the PEA level report was issued, further confirmatory metallurgical
testing and variability analysis work have been completed. This FS builds on the
results and premises of the previous findings, as well as the subsequent test
work programs between 2009 and 2011.
Some of the key optimizations from the trade-off studies include crushers and
conveyors for in-pit crushing and conveying of both ore and waste, high pressure
grinding rolls, and high density tailings deposition. These methods have had the
effect of reducing costs and improving recoveries as well as location logistics
to reduce the environmental footprint.
1) Mineral Resource Estimates
Mineral Resources take into account geologic, mining, processing and economic
constraints, and have been confined within appropriate LG pitshells, and
therefore are classified in accordance with the 2010 CIM Definition Standards
for Mineral Resources and Mineral Reserves.
Mineral Resources are reported using a copper price of US $2.88/lb and a gold
price of US$1,200/oz.
AMEC reported the Mineral Resources at a Base Case CuEq grade of 0.20%.
Mineral Resource Estimate at Selected CuEq Cut-offs
Effective Date May 26, 2011, Timothy O. Kuhl, SME Registered Member
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Cutoff Ton- Cu- Au NSR Contained Metal
CuEq nes- Eq Cu (g/ (US$/ CuEq Cu Au
(%) (Mt) (%) (%) t) t) ('000 lb) ('000 lb) (oz)
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Measured 0.1 322.5 0.38 0.27 0.17 13.83 2,667,000 1,933,000 1,734,600
0.2 255.8 0.42 0.31 0.19 15.71 2,389,000 1,734,000 1,555,400
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Indicated 0.1 336.2 0.36 0.26 0.17 16.7 2,665,000 1,897,000 1,818,100
0.2 256.2 0.42 0.3 0.2 19.98 2,399,000 1,712,000 1,637,400
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Measured 0.1 658.7 0.37 0.26 0.17 15.3 5,331,000 3,830,000 3,552,600
+ Indicated 0.2 512 0.42 0.31 0.19 17.85 4,788,000 3,446,000 3,192,800
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Inferred 0.1 115.7 0.3 0.21 0.13 13.39 753,000 538,000 499,200
0.2 73.7 0.38 0.27 0.17 17.46 613,000 439,000 405,700
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Note 1. Mineral Resources are contained within a conceptual Measured,
Indicated and Inferred optimized pitshell using the following assumptions:
maximum copper recovery of 91.17% and maximum gold recovery of 86.49% based
on the following equations: CuRec = (-74.812 x (Cu%^2)) + (85.727 x Cu%)
+ 66.668 and AuRec = 92.586 x Au(g/t)^0.064; assumed throughput rate of
60,000 t/d; Whittle constraining shell slopes between pit slope angle
ranging from 38 degrees to 49 degrees, waste and processed material mining
costs of US$1.08/t, fill waste mining costs of US$0.89/t, total processing
costs including reclamation of US$3.23/t, general and administrative costs
of US$0.52/t, gold price of US$1,200/oz, and copper price of US$2.88/lb.
Note 2. Copper equivalency was calculated using the formula CuEq = (((%Cu)
x (CuRec) x (22.0462) x ($lbCu) + (g/t / Au) x (AuRec) x (1/31.1035) x
($ozAu))) / ((CuRec) x (22.0462) x ($lbCu))).
Note 3. Rounding as required by reporting guidelines may result in apparent
summation differences between tonnes, grade and contained metal content.
Note 4. Tonnage and grade measurements are in metric units. Contained gold
and silver ounces are reported as troy ounces, contained copper pounds as
Imperial pounds.
2) Mineral Reserve Estimates
The Proven and Probable Mineral Reserves as of October 31, 2011 consists of 503
million tonnes grading 0.27% Cu and 0.17 g/t Au (0.37% CuEq) containing
approximately 3 billion lbs of copper and 2.7 million ounces of gold.
Mineral Reserve Statement
Effective Date 31 October 2011, R. Mendoza Reyes, P.Eng.
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Average Copper Contained
Cut-Off Grades Equivalent Metal
Confidence Grade Tonnes Cu Au CuEq Copper Gold
Category (US$/t) (Mt) (%) (g/t) (%) (M lb) (k oz)
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Proven Mineral Reserve 4.53 279.5 0.27 0.17 0.38 1,680 1,520
Probable Mineral Reserve 4.53 223.5 0.26 0.17 0.37 1,280 1,230
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Total Proven & Probable
Mineral Reserves 4.53 503.0 0.27 0.17 0.37 2,960 2,750
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Note 1. Mineral Reserves are estimated using a cut-off of US$4.53/t NSR, a
copper price of US$2.50/lb, and a gold price of US$1,085/oz. The NSR is
calculated by adding the NSR attributable to copper to the NSR attributable
to gold and then subtracting the freight costs, which include land freight,
port charges, ocean freight and miscellaneous costs. The attributable
copper is calculated using the metallurgical recovery obtained by the
formula: CuRec (%) = -74.812 (i) Cu(%)2 + 85.727 (i) Cu(%) + 66.668 with a
maximum copper recovery of 91.17%. The attributable gold is calculated
using metallurgical recovery obtained by the formula: AuRec (%) = 92.586
(i) Au(g/t)0.0649 with a maximum gold recovery of 86.49%.
Note 2. Mineral Reserves are constrained within a pit shell, optimized
using assumptions of a weighted average mining cost of US$1.32/t (ranging
from US$0.92/t to US$2.50/t for the different mining benches); a processing
cost of US$3.38/t plus US$0.51/t general and administrative costs, and
US$0.05/t allocation for closure costs; and pit slope angles that vary from
40 degrees to 49 degrees.
Note 3. A 0.5% mining loss factor was applied to account for dilution;
diluted grades are estimated at 1.7% lower than the in-situ grades.
Note 4. The life of mine, waste to ore strip ratio is 2.40. The assumed
life-of-mine throughput rate is 60 kt/d.
Note 5. The copper equivalency is calculated using the equation CuEq =
((%Cu) (CuRec) (22.0462) ($lbCu) + (g/t / Au) (AuRec) (1/31.1035) ($ozAu))
/ ((CuRec) (22.0462) ($lbCu)).
Note 6. Rounding as required by reporting guidelines may result in apparent
summation differences between tonnes, grade and contained metal content.
Note 7. Tonnage and grade measurements are in metric units. Contained gold
ounces are reported as troy ounces; contained copper pounds are Imperial
pounds.
The mill copper feed grades generally vary between 0.13% and 0.63% Cu, while the
gold grades generally vary between 0.05 g/t and 0.59 g/t Au of the mill feed.
The Year 1 to 5 composite plant mill feed estimate was replicated in a sample
which was tested during the most recent test program. This sample has a feed
grade value of 0.29% Cu and 0.16 g/t Au. These feed values were used as the
basis of design for the plant.
3) Life of Mine Plan
The FS supports production of a total of 2.5 billion lbs of copper and 2.28
million ozs of gold in concentrate or an average of approximately 109 million
lbs of copper and 99,000 ozs of gold annually. The proposed mine plan envisages
a conventional open pit operation extracting 60,000 t/d or 21.9 million t/a of
ore. The mine plan is based on the extraction of 503 million tonnes of ore for
processing during 23 years of operation at an overall LOM stripping ratio of
2.4:1 waste to ore. Total material movement from the pit during the life of the
mine is estimated at 1,701 million tonnes. The average LOM head grade of process
feed is 0.27% Cu and 0.170 g/t Au (0.37% CuEq) which equates to a NSR of $14.68
per tonne.
Mining will be accomplished using a conventional truck and shovel operation, in
conjunction with an in-pit crushing and conveying (IPCC) system. IPCC is a
system where the mined material is reduced in size by crushing to make it
suitable to be transported by belt conveyors out of the pit. After the PEA, IPCC
was identified as a potential cost reduction implementation for the Ajax Project
when compared with a truck-haul option only.
4) Capital and Operating Costs
The capital and operating cost estimates provided by AMEC, Tetra Tech and Golder
indicate an initial estimated capital cost of approximately $795 million,
inclusive of contingency of $87 million. The operating cost estimate will be
$1.32/t for mining and in-pit crushing and conveying, $3.46/t milled for
processing and tailings disposal and $0.53/t G&A cost.
Initial Estimated Capital US$ '000
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Site general and substation 46,280
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Mine pre-stripping 34,443
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Mining equipment 80,443
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Crushing 25,700
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Conveying 11,764
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Ore storage and HPGR 89,614
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Concentrator 144,815
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Tailings storage 79,493
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Site services & utilities 15,304
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Ancillary buildings 18,639
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Plant site mobile fleet 4,437
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Water supply from Lake 14,805
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Total Direct Initial Capital 565,737
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Project indirect 107,176
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Owners costs 34,500
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Contingency 87,570
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TOTAL INITIAL ESTIMATED CAPITAL 794,983
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Sustaining Capital US$ '000
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Mining equipment 262,714
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Crushing 62,400
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Conveying 73,058
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Stacking 57,987
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Plant site 43,214
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Tailings 104,642
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TOTAL ESTIMATED SUSTAINING CAPITAL 604,015
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Approximately $200 million is expected to be incurred in year 5 for in-pit
crushing and conveying.
Environmental & Permitting
The Project is currently in the early stages of an environmental assessment
process involving both federal and provincial government agencies and will be a
state-of-the-art operation designed to meet and exceed health, safety and
environmental requirements in Canada.
Knight Piesold initiated the environmental studies for the Ajax Project in 2007,
including ground and surface water quality and quantity, climatology, fish and
fish habitat, wildlife, and vegetation studies. The environmental study suggests
that proven mitigation methods will be effective in controlling environmental
effects. Acid base accounting was carried out as part of the environmental
baseline study, and the results indicate that the waste rock and ore are not
acid generating.
Abacus submitted a Project Description to the BC Environmental Assessment Office
(EAO) and the federal Canadian Environmental Assessment Agency (CEAA) in early
2011. The project description was accepted by EAO on February 25, 2011 and on
March 16, 2011 by CEAA.
The provincial Environmental Assessment Office issued an Order under Section 10
of the Environmental Assessment Act on February 25, 2011 indicating that the
Project must proceed through the provincial Environmental Assessment review. The
CEAA commenced a comprehensive study on May 25, 2011 and posted a Notice of
Commencement on the CEAA Registry on May 31, 2011. A federal project agreement
was signed on August 17, 2011. The draft Project Application Information
Requirements (dAIR) was provided to the EAO and CEAA on August 12, 2011 for
distribution to the Technical Working Group. The Proponent Application/
Environmental Impact Statement (EIS) is expected to be submitted in 2012.
Local Resources/Infrastructure
Local resources necessary for the exploration, development, and operation of the
Ajax property are located in Kamloops. Kamloops has a resource-based economy and
is a transportation hub for the Canadian National Railway (CNR) and Canadian
Pacific Railway (CPR). Numerous service and supply companies which service
resource industries are established in Kamloops, including several diamond
drilling companies, light-to heavy equipment contractors and a metallurgical
testing laboratory. Highway 1 services Kamloops and Highway 5 is situated within
6 km of the Ajax property. There is also an airport with daily scheduled flights
to Vancouver, Calgary, Kelowna and Prince George.
Exploration/History
Abacus acquired the Afton property in 2002 from Teck Ltd. Historic drilling on
the Ajax property was concentrated in the areas of the open pit mines that were
in production in the 1980s and 1990s. Afton Mines Ltd., controlled by Teck,
commenced production at Ajax East and Ajax West in 1989. Production was
suspended in 1991 due to low metal prices. A second period of production began
in 1994 and was again suspended in 1997. During the periods of production, it is
estimated that 17 Mt was mined and 13 Mt milled.
Abacus undertook drilling campaigns from 2005 to 2010 consisting of diamond
drilling, more recently targeting extensions of mineralization along strike and
to depth. The approximate drill spacing is 50 x 50 m in the areas of
mineralization.
Conference Call Details
A conference call to discuss the results of the Ajax Project Feasibility Study
has been scheduled for Wednesday, December 21, 2011 at 4:30pm ET (1:30pm PT).
Dial-in numbers for North America are: toll free 1-866-226-1792 or 416-340-2216;
for International 1-800-9559-6849. To access the simultaneous webcast, visit
Abacus Mining's website at www.amemining.com. A playback version will be
available until Friday, January 13, 2012 at 1-800-408-3053 (N.A. toll free) or
905-694-9451 using the pass code 2014266.
Qualified Persons
In May 2010, Abacus commissioned a team of engineering consultants to complete
the Ajax Project Feasibility Study in accordance with National Instrument
43-101. Tetra Tech was retained as the lead consultant for the Study.
The mineral resources and reserves for the Ajax Project were estimated by AMEC
Americas Ltd. (AMEC) under the direction of Timothy O. Kuhl R.M. and Ramon
Mendoza Reyes, P.Eng. Mr. Kuhl as a qualified person for the purposes of
National Instrument 43-101, has reviewed and verified the data that pertains to
the resources in this press release. Mr. Mendoza Reyes as a qualified person for
the purposes of National Instrument 43-101, has reviewed and verified the data
that pertains to the reserves in this press release.
The technical information in this news release has been reviewed and approved by
Hassan Ghaffari, P.Eng., Senior Engineer with Tetra Tech and overall manager for
the Feasibility Study, and by Dave Laudrum, P.Geo., Abacus's Chief Geologist and
qualified person for the Ajax Project, both of whom are qualified persons within
the meaning of National Instrument 43-101.
The NI 43-101 Technical Report will be available on the Company's website
(www.amemining.com) and on SEDAR (www.sedar.com).
On Behalf of the Board,
ABACUS MINING AND EXPLORATION CORPORATION
James D. Excell, President & CEO
Forward-Looking Information
This release includes certain statements that are 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 changes to commodity prices, mine and
metallurgical recovery, operating and capital costs,foreign exchange rate, and
ability to obtain required permits on a timely basis including permission from
Kinder Morgan to have access to the pipeline right-of-way, 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. Except as required by applicable securities laws, 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.
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