Excelsior Releases Positive Prefeasibility Study Demonstrating
$1.24 Billion Pre-Tax NPV and 59.7% Pre-Tax IRR for the Gunnison
Copper Project
PHOENIX, ARIZONA--(Marketwired - Jan 17, 2014) - Excelsior
Mining Corp. (TSX-VENTURE:MIN)(FRANKFURT:3XS)(OTCQX: EXMGF)
("Excelsior" or the"Company") is pleased to announce the results of
a comprehensive Prefeasibility Study ("PFS") on the North Star
Deposit of the Gunnison Copper Project, located in southern
Arizona. The PFS was completed by M3 Engineering & Technology
Corporation ("M3") of Tucson, AZ and is effective as of January 13,
2014. The National Instrument ("NI") 43-101 compliant Report (the
"Report") summarizing the results of the PFS will be filed on SEDAR
and Excelsior's website within 45 days of this news release.
Results of the PFS disclosed in this press release are in USD and
pre-tax (except where otherwise indicated).
Highlights of the
North Star Gunnison Copper Project PFS "Acid Plant" option
include:
- Pre-tax Net Present Value ("NPV") of $1.24 billion (after-tax
$0.826 billion) at a 7.5% discount rate (using a copper price of
$2.75/lb)
- Pre-tax Internal Rate of Return ("IRR") of 59.7% (after-tax
44.7%)
- Pre-tax payback period of 1.8 years (after-tax 2.4 years)
- Initial estimated capital cost (excluding sustaining capital)
of $284.74 million
- Average life-of-mine operating costs of US$0.68 per pound
- Other costs of $0.12 per pound, including Royalties of $0.029
per pound
- Annual production rate of 110 million pounds of copper for the
first 14 years, then declining for a 20 year mine life, with a
total of 1.682 billion pounds of copper produced over the life of
the mine.
"The completion of a
positive Prefeasibility Study is a significant de-risking event in
Excelsior's development and we are very pleased with the results.
The results surpass the robust economic potential indicated by the
2011 Preliminary Economic Assessment and support copper extraction
of the North Star Deposit through in-situ recovery with the
potential to generate exceptional financial returns," says Mark J.
Morabito, Chairman of Excelsior. "With initial production expected
to commence in Q4 2016 we are looking forward to beginning the next
phase of development."
Commenting on the
results, President and CEO, Stephen Twyerould said, "With the
completion of this major milestone, the commercial case for the
Gunnison Copper Project has grown even stronger. The Prefeasibility
Study has confirmed the robust economics and technical viability
for what has the potential to be one of the lowest cost copper
producers in North America."
Financial
Analysis
As highlighted in
the tables below, the PFS demonstrates robust project economics in
both the "Acid Plant" and "Non-Acid Plant" scenarios, with the Acid
Plant option adding an additional $174.2 million to the project
pre-tax NPV. Based on an initial annual production rate of 110
million pounds, the PFS indicates that including an Acid Plant as a
component of the project, generates a pre-tax NPV of $1.24 billion,
at a cash flow discount rate of 7.5%. The pre-tax IRR for this
option is 59.7% with a payback period of 1.8 years. On an after-tax
basis, the PFS shows an NPV7.5 of $825.83 million, IRR of 44.7% and
a payback period of 2.4 years.
Without an Acid
Plant, the project still has a significant pre-tax NPV7.5 of $1.06
billion and an IRR of 61.4%, (after-tax NPV7.5 of $721.41 million
and an IRR of 46.1%). The after-tax analysis is based on a number
of assumptions which will be fully set out in the Report. The level
of accuracy of the PFS is considered to be +/-20%.
Both scenarios used
the following parameters over the 20 year life of the project:
- copper selling price of $2.75 per pound,
- total copper recovery of approximately 47% (based on a
combination of metallurgical recovery and sweep efficiency),
- average of 8.14 pounds of acid consumed for every pound of
copper produced,
- acid price of $45.70/ton for the Acid Plant option and $125/ton
for the Non-Acid Plant option,
- state tax rate of 6.97%, and
- a federal tax rate of 35%.
PRE-TAX |
Acid Plant |
|
Non-Acid Plant |
|
IRR |
59.7 |
% |
61.4 |
% |
Payback (years) |
1.8 |
|
1.5 |
|
NPV (million $) |
|
|
|
|
Discount Rate |
|
|
|
|
0% |
2,377.9 |
|
1,961.7 |
|
5% |
1,525.7 |
|
1,295.1 |
|
7.5% |
1,238.6 |
|
1,064.3 |
|
10% |
1,013.4 |
|
880.8 |
|
AFTER-TAX |
Acid Plant |
|
Non-Acid Plant |
|
IRR |
44.7 |
% |
46.1 |
% |
Payback (years) |
2.4 |
|
2.0 |
|
NPV (million $) |
|
|
|
|
Discount Rate |
|
|
|
|
0% |
1,625.4 |
|
1,360.0 |
|
5% |
1,028.8 |
|
887.2 |
|
7.5% |
825.8 |
|
721.4 |
|
10% |
666.0 |
|
588.8 |
|
Total initial
capital expenditures for the "Acid Plant" option (including
contingency) are estimated at $284.74 million. Sustaining capital,
which includes the acid plant built in year three, water treatment
facilities and production wellfield are estimated at $602.4
million. Net closure costs are estimated at $44.5 million. For the
"Non-Acid Plant" option, total initial capital expenditures
(including contingency) are estimated at $284.74 million.
Sustaining capital, which includes the water treatment facilities
and production wellfield are estimated at $528.8 million. Net
closure costs are estimated at $42.3 million.
The PFS assumes a
copper selling price of $2.75/lb. Average life-of-mine operating
direct cash costs are estimated at $0.68/lb for the "Acid Plant"
option and $0.98/lb for the "Non-Acid Plant" option.
|
Acid Plant |
Non-Acid Plant |
Copper Cathode sold (MMlb) |
1,682 |
1,682 |
Copper Price ($/lb) |
2.75 |
2.75 |
Gross Revenue (million $) |
4,625.9 |
4,625.9 |
Operating Costs |
(million $) |
Cost/lb |
(million $) |
Cost/lb |
Production (Wellfield) |
449.3 |
0.27 |
935.5 |
0.56 |
SXEW |
355.7 |
0.21 |
367.6 |
0.22 |
Water Treatment Plant |
198.5 |
0.12 |
198.5 |
0.12 |
G&A |
147.3 |
0.09 |
147.3 |
0.09 |
Direct Operating Cash Costs |
1,150.7 |
0.68 |
1,648.8 |
0.98 |
Royalties |
48.3 |
0.03 |
48.3 |
0.03 |
Other Production Expenses |
161.8 |
0.09 |
153.5 |
0.09 |
Initial Capital Costs |
(million $) |
Cost/lb |
(million $) |
Cost/lb |
Production (Wellfield) |
75.3 |
0.04 |
75.3 |
0.04 |
SXEW + Infrastructure |
186.3 |
0.11 |
186.3 |
0.11 |
Owners Costs |
23.2 |
0.01 |
23.2 |
0.01 |
Sub-total Initial Capital Costs |
284.7 |
0.17 |
284.7 |
0.17 |
Sustaining Capital Costs |
(million $) |
Cost/lb |
(million $) |
Cost/lb |
Production (Wellfield) |
440.2 |
0.26 |
440.2 |
0.26 |
Plant + Infrastructure |
162.2 |
0.10 |
88.6 |
0.05 |
Sub-total Sustaining Capital Costs |
602.4 |
0.36 |
528.8 |
0.31 |
Taxes |
752.5 |
0.45 |
601.7 |
0.36 |
Mineral Resources
and Mineral Reserves
Mineral Resource
Estimate
The mineral resource
estimate for the North Star Deposit is based on results from 88
drill holes totalling 129,272 feet (ft). The estimate is consistent
with the CIM definitions referred to in NI 43-101. Mr. Herb
Welhener, RM-SME, of Independent Mining Consultants, Inc. ("IMC")
of Tucson, Arizona is a Qualified Person as defined by NI 43-101
and is responsible for reviewing and approving the mineral resource
and mineral reserve estimates and the QA/QC associated with the
estimates. Mr. Welhener is independent of the Company. He has
verified, reviewed and approved the technical disclosure contained
in the 'Mineral Resources and Mineral Reserves' section of this
news release and the underlying sampling, analytical and test data.
The mineral resource estimate has been prepared using a 0.05% Total
Cu cut-off grade and is effective as of January 13, 2014.
North Star Resources (Oxide and Transition at 0.05%
cut-off) |
Category |
Short Tons (million) |
Total Copper % |
Pounds of Cu (million) |
Measured |
158 |
0.38 |
1,205 |
Indicated |
525 |
0.26 |
2,704 |
Total M&I |
683 |
0.29 |
3,909 |
|
|
|
|
Inferred |
338 |
0.21 |
1,397 |
The mineral resource
estimate is contained within a block model of the North Star
deposit covering a surface area of 3.30 square miles and to a
maximum depth of 2,575 feet below the topographic surface.
The major geologic
formations and oxidization types are incorporated into the block
model based on the drill hole intercept data. The total copper
grades are estimated using an ordinary kriging estimation technique
from 25 ft drill hole composite data. The grade estimate for the
sedimentary units uses a 700 ft circular by 50 ft search distance
dipping 30 degrees east to parallel the general dip of the
sedimentary units. The grade estimation respected the contacts of
the various sedimentary units. The 700 ft distance is 70% of the
variogram range. The total copper grades in the non-sedimentary
units were estimated using a 500 ft spherical search. No copper
grades are estimated in the overburden or un-mineralized rock
units. Copper grade estimates based on eight or more holes are
classified as Measured, grades based on three to seven holes are
Indicated and grades based on less than three holes are
Inferred.
All samples are
prepared from manually split half-core sections on site in Arizona.
Split drill core samples are then sent to Skyline Assayers &
Laboratories in Tucson, Arizona for Total Copper and Sequential
Copper analyses. Standards, blanks, and duplicate assays are
included at regular intervals in each sample batch submitted from
the field as part of an ongoing Quality Assurance/Quality Control
Program.
Mineral Reserve
Estimate
The PFS mineral
reserve is based on an economic analysis of the mineral resource
using the costs developed during the 2011 PEA, test work to
estimate the recovery factors and a $2.75/lb copper price. The
economic optimization was performed on Measured and Indicated
Resources. EBIT (earnings before interest and tax) was calculated
on a block by block basis based on economic parameters. Consistent
blocks (in vertical and horizontal directions) at a cut-off grade
of 0.05% total Cu with a positive EBIT values that were greater
than the capital cost of drilling and establishing the wells
required for each column of blocks were included in the reserve.
Total Cu% was selected for the mineral reserve estimate. The
mineral reserve was estimated after applying engineering and
operational design parameters which removed the thinner and deeper
portions of the mineral resource. Internal dilution has been
included in the final mineral reserve estimate. IMC is of the
opinion that the mineral reserve estimate derived in this PFS
reasonably quantifies the economical ore mineralization of the
North Star Deposit. The reserve estimate is as of January 13, 2014
and the mineral reserves presented in the table below are included
in the mineral resource estimate set out above.
North Star Mineral Reserves (Oxide and Transition at
0.05% cut-off) |
Category |
Short Tons (million) |
Total Copper % |
Pounds of Cu (million) |
Probable |
632 |
0.29 |
3,614 |
Excelsior is not
aware of any environmental, permitting, legal, title, taxation,
socio-political, marketing or other issues which may materially
affect the mineral resource and mineral reserve estimates. The
production schedule of the PFS recovers approximately 47% of the
mineral reserve.
Project Summary
The Gunnison Copper
Project is located in a remote section of Cochise County about 65
miles east of Tucson, Arizona in the Johnson Camp Mining District.
The property is within the copper porphyry belt of Arizona. The
focus of the project is the North Star deposit, which currently
hosts a total Measured and Indicated mineral resource of 3.91
billion pounds of copper (683 M tons at 0.29%) and an Inferred
mineral resource of 1.40 billion pounds of copper (338 M tons at
0.21%). The Probable mineral reserves for the North Star Deposit
are 3.61 billion pounds of copper (632 M tons at 0.29%). This oxide
and transition portion of the mineral reserve has the potential to
be mined using in-situ recovery methods.
The proposed
project, as stated in the PFS, includes the following
components:
- The North Star copper deposit.
- The Wellfield including injection, recovery, observation and
perimeter wells and related infrastructure.
- The acid plant, including sulfur and sulfuric acid handling and
cogeneration plant.
- Processing infrastructure including a Solvent
Extraction/Electrowinning ("SXEW") Plant and pipe corridors.
- Water treatment facility and facility ponds.
- Ancillary infrastructure to support the mine and process plant
(electrical substation, administration/office buildings and
transmission lines).
- The rail infrastructure and rail car storage.
The proposed project
will produce 110 million pounds of copper per year for the first 14
years, then declining to year 20. Processing will take place at the
Gunnison site and will involve solvent extraction and
electrowinning to produce pure copper cathode sheets.
Technical Report and
Qualified Person
An NI 43-101
Technical Report will be filed on SEDAR and on Excelsior's website
within 45 days of the date of this news release. The Report will
consist of a summary of the Prefeasibility Study. The Report is
being prepared under the supervision of Conrad Huss, P.E. of M3
Engineering & Technology Corporation, Tucson, Arizona, who is a
qualified person that is independent of the Company. The Report
will also receive contributions from the following additional
qualified persons, who are also independent of the Company:
- Dr. Ronald J. Roman of Leach, Inc., Tucson, Arizona (metallurgy
and leaching recovery).
- Peter Lenton, P.E. of Haley & Aldrich, Phoenix, Arizona
(hydrology, extraction methods, production schedule).
- Peter Lemke, P.E. of Golder Associates Inc., Lakewood, Colorado
(water treatment and related facilities).
- Mr. Herb Welhener, RM-SME, of IMC of Tucson, Arizona (geology,
mineral resource and reserve).
Each of the
qualified persons has reviewed and approved the technical
information contained in this news release that is relevant to his
area of responsibility and verified the data underlying such
technical information.
About Excelsior
Excelsior is a
mineral exploration and development company that is advancing the
Gunnison Copper Project. The Excelsior management team consists of
experienced professionals with proven track records of advancing
mining projects into production.
Prior to the release
of the Report on the PFS results, additional information about the
Gunnison Copper Project can be found in the technical report filed
on SEDAR at www.sedar.com entitled: "Gunnison Copper Project
Preliminary Economic Assessment, NI 43-101 Technical Report" dated
November 18, 2011.
For more information
on Excelsior, please visit our website at
www.excelsiormining.com.
ON BEHALF OF THE
EXCELSIOR BOARD
Stephen Twyerould,
President & CEO
Cautionary Note
Regarding Forward-Looking Information
This news
release contains "forward-looking information" concerning
anticipated developments and events that may occur in the future.
Forward looking information contained in this news release
includes, but is not limited to, statements with respect to: (i)
the estimation of mineral resources and mineral reserves; (ii) the
robust economics, potential returns associated with the Gunnison
Project, (iii) the technical viability of the Gunnison Project;
(iv) the market and future price of copper; (v) expected
infrastructure requirements; (vi) the results of the PFS including
statements about future production, future operating and capital
costs, the projected IRR, NPV, payback period, construction
timelines, permit timelines and production timelines for the Kami
Property, (vii) expected acid consumption rates; and (viii) the
ability to mine the Gunnison Project using in-situ recovery mining
techniques.
In certain
cases, forward-looking information can be identified by the use of
words 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" suggesting future
outcomes, or other expectations, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. Forward-looking information contained in this news
release is based on certain factors and assumptions regarding,
among other things, the estimation of mineral resources and mineral
reserves, the realization of resource and reserve estimates, copper
and other metal prices, the timing and amount of future exploration
and development expenditures, the estimation of initial and
sustaining capital requirements, the estimation of labour and
operating costs, the availability of necessary financing and
materials to continue to explore and develop the Gunnison Project
in the short and long-term, the progress of exploration and
development activities, the receipt of necessary regulatory
approvals, the completion of the permitting process, the estimation
of insurance coverage, and assumptions with respect to currency
fluctuations, environmental risks, title disputes or claims, and
other similar matters. While the Company considers these
assumptions to be reasonable based on information currently
available to it, they may prove to be incorrect.
Forward looking
information involves known and unknown risks, uncertainties and
other factors 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 risks
inherent in the exploration and development of mineral deposits,
including risks relating to changes in project parameters as plans
continue to be redefined including the possibility that mining
operations may not commence at the Gunnison Project, risks relating
to variations in mineral resources and reserves, grade or recovery
rates resulting from current exploration and development
activities, risks relating to the ability to access infrastructure,
risks relating to changes in copper and other commodity prices and
the worldwide demand for and supply of copper and related products,
risks related to increased competition in the market for copper and
related products and in the mining industry generally, risks
related to current global financial conditions, uncertainties
inherent in the estimation of mineral resources, access and supply
risks, reliance on key personnel, operational risks inherent in the
conduct of mining activities, including the risk of accidents,
labour disputes, increases in capital and operating costs and the
risk of delays or increased costs that might be encountered during
the development process, regulatory risks, including risks relating
to the acquisition of the necessary licenses and permits,
financing, capitalization and liquidity risks, including the risk
that the financing necessary to fund the exploration and
development activities at the Gunnison Project may not be available
on satisfactory terms, or at all, risks related to disputes
concerning property titles and interest, environmental risks and
the additional risks identified in the "Risk Factors" section of
the Company's reports and filings with applicable Canadian
securities regulators.
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 not to be as
anticipated, estimated or intended. Accordingly, readers should not
place undue reliance on forward-looking information. The
forward-looking information is made as of the date of this news
release. Except as required by applicable securities laws, the
Company does not undertake any obligation to publicly update or
revise any forward-looking information.
Neither the 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, and no
securities regulatory authority has either approved or disapproved
of the contents of this release.
Excelsior Mining Corp.JJ JennexVice President, Corporate
Affairs604-681-8030
x240info@excelsiormining.comwww.excelsiormining.com