Castle Resources Announces Positive Preliminary Economic Assessment for the Granduc Copper Project
February 28 2013 - 3:50PM
Marketwired Canada
Castle Resources Inc. (TSX VENTURE:CRI) ("Castle" or the "Company") is very
pleased to provide investors the results from the its preliminary economic
assessment ("PEA") completed for its 100% owned Granduc Copper Project located
near Stewart, British Columbia and prepared in accordance with National
Instrument 43-101. The PEA confirms that current resources achieve a pre-tax net
discounted value ("NDV 8%") of $489 million and a pre-tax net present value
("NPV 8%) of $388 million, a 4 year payback period and annual production
averaging 70 million pounds of payable copper equivalent over a 15 year mine
life. (All figures in US dollars except where noted). Castle Resources
commissioned Tetra Tech, an independent third party, to prepare the PEA.
PEA Highlights:
-- Base Case (defined below) initial estimated CAPEX of $494 million
including a 16.3% contingency of $69 million with estimated sustaining
capital of $239 million over a 15 year mine life
-- Base Case pre-tax NDV 8% from a discounting start date of Q1 2016 is
$489 million with a pre-tax IRR of 20.9%; post-tax NDV 8% of $319
million with a post-tax IRR of 17.8%. Changing the discounting start
date to Q1 2013 results in a NPV 8% of $388 million pre-tax and $253
million post-tax, but does not impact the IRR.
-- Life of Mine average operating cash flow is $142 million per year; Peak
Life of Mine (Years 2-8 inclusive) is $164 million per year
-- The project evaluation assumes flat long term metal prices equal to the
rolling three year average of $3.65/lb Cu, $28/oz Ag and $1480/oz Au.
The benchmark magnetite prices used is $122/tonne. The assumed exchange
rate is C$1.00 = US$0.99.
-- The resource used is 11.32 million tonnes in the measured & indicated
category grading 1.47% Cu, 0.17 g/t Au and 12.4 g/t Ag and 44.63 million
tonnes in the inferred category grading 1.43% Cu, 0.19 g/t Au & 10.7 g/t
Ag
-- Peak Life of Mine (Years 2 - 8 inclusive) annual payable production is
forecasted at 72 million lbs of copper, 811 koz silver, 9.5 koz gold and
251,000 tonnes of magnetite
-- 8,500 tonnes/day underground mining operation
-- Base Case gross cash operating costs of $2.04/lb payable Cu and net cash
costs (inclusive of by- product credits) of $1.37/lb payable Cu.
Cautionary Statement: Mineral resources that are not mineral reserves do not
have demonstrated economic viability. This preliminary economic assessment is
preliminary in nature; it includes inferred mineral resources that are
considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves,
and there is no certainty that the results of the preliminary economic
assessment will be realized.
"The results of our PEA clearly demonstrate the strong economics of the Granduc
Copper Project," stated Mr. Mike Sylvestre, President & CEO of Castle Resources.
"Given the excellent potential to continue to expand the Granduc resource, the
project economics should continue to improve as we lengthen the life of mine and
continue the process of optimization."
Mr. Sylvestre continued: "The PEA represents a significant milestone in the
development of the Granduc on our road towards a completed feasibility study.
With the completion of the PEA we now have robust economics to add to the
Granduc story, along with a continually expanding high-grade copper resource and
excellent infrastructure already in place, notably the Granduc Road and 17 km
haulage tunnel. We are particularly pleased with the CAPEX estimate, a figure
that in a climate of rising costs for large mining projects is very reasonable
and will be attractive to potential off-take and joint venture partners as we
advance the project towards feasibility."
The PEA envisions an underground mining operation similar in scope to the
historic mining operations from the 1970s and 80s. The PEA assumes that the mine
will use the low cost, high productivity sub-level caving method for
approximately 80% of ore mined. The remaining 20% of ore will be mined using the
blast hole stoping method which will consume the bulk of waste rock from
development for backfill. Under the PEA, the ore will be transported by rail
through the 17 km Tide haulage tunnel to the concentrator. The concentrator
would operate at a steady-state rate of 8,500 tonnes/day, beginning with all of
the crushed ore being ground in a SAG mill to 160 microns, then only the rougher
concentrate representing 15% of the total ore will be reground to a size of
approx. 25 microns. Rougher tailings will be subjected to magnetic separation to
recover approx. 61% of the feed magnetite.
Based on test work completed on behalf of Castle and historical performance, the
concentrator is expected to achieve a recovery of approximately 95% and will
produce a clean 27% copper concentrate. It is anticipated that concentrate will
be trucked 52 km by road to a marine load-out facility near Stewart, where it
will be shipped in vessels with 50 kt capacity to end users located primarily in
Asia.
The Base Case project includes production of a copper concentrate, that also
contains payable silver and gold, as well as a magnetite concentrate that would
be sold as feed to the steel industry. In addition, Castle commissioned an
independent study to analyze the impact of selling some magnetite as heavy media
to regional coal producers (this study will be included in the full PEA when
published on SEDAR). In the Alternative Case, the economics in the PEA examine
the impact the Granduc Copper Project without magnetite production.
Project Economics:
Base Case: A copper concentrate (with Ag/Au credits) and a magnetite concentrate
will be produced
Alternative Case: A copper concentrate (with Ag/Au credits) will be produced (no
magnetite)
Initial CAPEX for the Base Case is estimated at $494 million including a 16.3%
contingency of $69 million. Sustaining capital is estimated at $239 million, or
approximately $15 million per year over the 15 year life of project. For the
Alternative Case, Initial CAPEX is lower at $485 million while sustaining
capital is unchanged.
Base Case CAPEX & OPEX (US dollars)
Item Initial CAPEX
Mining $ 167 million
Processing $ 67 million
Tailings Storage Facility $ 28 million
Infrastructure $ 70 million
------------------
Total Directs $ 332 million
Indirects & Owners $ 93 million
Contingency $ 69 million
------------------
Total $ 494 million
Item Sustaining CAPEX
Mining $ 178 million
Tailings Storage Facility $ 33 million
Contingency $ 28 million
------------------
Total $ 239 million
Item OPEX
Mining $ 23.52/tonne
Processing & Tailings $ 9.31/tonne
G&A $ 6.55/tonne
Magnetite Resource:
As an addition to the previously reported Cu, Au, and Ag resource estimation,
Tetra Tech has been retained to estimate the magnetite content of the Granduc
deposit. The Qualified Person for this resource estimation is Robert Morrison,
Ph.D., MAusIMM (CP), P.Geo., Lead Resource Geologist for Tetra Tech. The current
Granduc inferred magnetite resource is 37.1 million tonnes grading 13.3%
magnetite, assuming a 2.8% magnetite cut-off, applied only to blocks above the
0.8% CuEq (Cu-Au-Ag Cu-equivalent) cut-off. This estimation utilizes existing Fe
assays, a strong Fe-magnetite correlation, and incorporates new magnetite
assays. The magnetite grades were estimated into the existing high-grade Cu
domains of the deposit, where data density allowed, using a combination of
Conditional Simulation and Collocated Cokriging. At a 0.8% CuEq cut-off,
magnetite was estimated into 11.04 Mt of the initial Measured and Indicated
Resource, and 28.04 Mt of the initial Inferred Resource. The remainder of the
blocks (including all 14.11 Mt of the North Zone above 0.8% CuEq cut-off, as
well as 0.28 Mt Measured & Indicated and 2.48 Mt Inferred in the Main Zone above
0.8% CuEq cut-off), representing approximately 30% of the total resource, did
not have magnetite estimated. This is not to indicate that these blocks do not
contain any magnetite, only that there is insufficient data to facilitate such
an estimate at this time.
The following Qualified Persons have reviewed and approved the technical
disclosure contained in this press release:
-- Robert Morrison, Ph.D., MAusIMM (CP), P.Geo., Lead Resource Geologist
for Tetra Tech, regarding the resource estimate
-- Garth Liukko, P.Eng., Mine Engineer for Tetra Tech, regarding mining
methods and mining capital and operating costs
-- Cam McKinnon, P.Eng., Process Manager for Tetra Tech, regarding mineral
processing and metallurgical testing, recovery methods and process
capital and operating costs
-- Dharshan Kesavanathan, P.Eng., Manager of Private Sector Water for Tetra
Tech, regarding surface infrastructure design and the associated capital
and operating cost estimates
-- Sabry Abdel Hafez, Ph.D., P.Eng., Mine Engineer for Tetra Tech,
regarding the economic analysis
-- Andre C. Gagnon, P.Eng., Geotechnical Engineer for Tetra Tech, regarding
tailings storage facility design and the associated capital and
operating costs
-- Brad Leonard, P. Geo., Castle's Exploration Manager has reviewed and
approved the contents of this news release on behalf of the Company
About Castle Resources
Castle is a Toronto-based junior mineral development company focused on the
exploration and redevelopment of the 100% owned past producing Granduc Copper
Mine. Castle currently has 173 million shares outstanding shares. For more
information please visit the Castle Resources' website at
www.castleresources.com.
Disclaimer
This press release contains forward-looking information within the meaning of
Canadian securities laws. forward-looking information includes, but is not
limited to, statements with respect to the Granduc project; Castle's ability to
raise additional funds necessary; the future price of copper; gold, silver and
magnetite, the estimation of mineral reserves and mineral resources; conclusions
of economic evaluation; the realization of mineral reserve estimates; the timing
and amount of estimated future production, development and exploration; costs of
future activities; capital and operating expenditures; success of exploration
activities; mining or processing issues; currency exchange rates; government
regulation of mining operations; and environmental risks. Generally,
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
statements that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved". Forward-looking statements
are based on the opinions and estimates of management as of the date such
statements are made. 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 Castle to be materially different
from those expressed or implied by such forward-looking statements, including
but not limited to those risks described in Castle's public disclosure documents
filed on SEDAR from time to time. Although management of Castle 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. Castle does not undertake to update any
forward-looking statements, except in accordance with applicable securities
laws.
This news release does not constitute an offer to sell or solicitation of an
offer to sell any of the securities in the United States. The securities have
not been and will not be registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") or any state securities laws and
may not be offered or sold within the United States or to a U.S. Person unless
registered under the U.S. Securities Act and applicable state securities laws or
an exemption from such registration is available.
FOR FURTHER INFORMATION PLEASE CONTACT:
Castle Resources Inc.
Mike Sylvestre
President & CEO
416-366-4100
mike@castleresources.com
Castle Resources Inc.
Lenny Foreht
VP Operations & Corporate Development
416-644-9003
lforeht@castleresources.com
www.castleresources.com
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