Carpathian Gold Inc. (TSX:CPN) (the "Corporation" or "Carpathian") is pleased to
provide a review of the results, progress and achievements for 2009 and an
outlook for 2010.
In early 2009, the Corporation established goals of delivering an initial
resource estimate on the wholly owned Riacho dos Machados ("RDM") Gold Project,
located in Minas Gerais State, Brazil, along with a Preliminary Economic
Assessment ("PEA") on the commercial viability of the project. The RDM Gold
Project is one of two advanced exploration/development gold platforms that the
Corporation owns and represents the first near-term production project that will
elevate the Corporation to a mid-tier gold producing company within the near
future. The 2009 work program clearly met the Corporation's objectives and
established the robust economic viability of the project.
The second development project is the wholly owned Rovina Valley Project ("RVP")
which is a gold-copper porphyry system located in central Romania. While it
might appear that activity on this project throughout 2009 was minimal, the
Corporation was active on several fronts: it worked on an extensively detailed
PEA study and advanced long-lead time line studies, renewed the Exploration
License for a further 3 year period, and continued involvement in community
engagement and stakeholder programs. Work in 2009 was limited to these
activities, given the focus of the Corporation was to advance quickly the
nearer-term production potential of the RDM Gold Project, which the Corporation
feels will complement the longer lead-time required for the potential production
of the Rovina Valley Project. The goal established by the Corporation was to
deliver the results of the PEA study by year-end 2009. It is now anticipated
that these results will be published in mid to late first quarter 2010 due to
additional metallurgical test work that is underway, which is designed to
confirm the highly encouraging recovery rates obtained from preliminary test
work completed in 2009.
The following summarizes the results and major achievements established by the
Corporation for each project in 2009.
Riacho Dos Machados Gold Project, Brazil
The RDM Gold Project is a 22,000 hectare land parcel comprising of 12
Exploration Licenses and one Mining Concession that covers a 20 kilometre long
north-south shear zone. The Mining Concession hosts a past producing open pit
gold mine, located on the southern end of the shear zone, that was operated by
Companhia Vale do Rio Doce ("Vale") between 1986 and 1997 from which oxide gold
ore was mined to maximum depths of 60 m below the surface. The gold
mineralization at RDM is hosted within the shear zone within a package of
Precambrian aged metamorphic rocks. This zone strikes 20 degrees and dips 40 to
50 degrees west. At the RDM mine-site, the gold mineralization has now been
defined over a continuous strike length of at least 1,800 m, but remains open
along strike and at depth to at least 550 m below surface.
- In mid 2009, the Corporation announced the results of the initial NI 43-
101 compliant Resource Estimate. This Resource Estimate utilized open
pit optimization software to constrain an open pit resource and
underground resource for material below the open pit using appropriate
cutoff grades, costs, and US $800 per ounce gold price. The open pit
will be 1,700 m in length and ranges from 60 m deep in its southern end
to 270 m deep in the middle portion of the planned pit.
The open pit resource includes (combined oxide, transition, fresh zones and
0.30 g/t Au cut-off):
- Measured + Indicated - 4.547 M tonnes at 1.84 g/t Au for 268,800
ounces Au
- Inferred - 15.164 M tonnes at 1.56 g/t Au for 762,700 ounces Au
The underground resource includes (1.0 g/t Au cut-off):
- Measured + Indicated - 0.201 M tonnes at 3.31 g/t Au for 21,400
ounces Au
- Inferred - 2.733 M tonnes at 2.84 g/t Au for 249,700 ounces Au
The combined open pit and underground resource includes:
- Measured + Indicated - 4.748 M tonnes at 1.90 g/t Au for 290,200
ounces Au
- Inferred - 17.897 M tonnes at 1.76 g/t Au for 1,012,400 ounces Au
The underground resource has a further geological potential of 12
million tonnes at 2.91 g/t Au for a total in-situ metal content of 1.12
million gold ounces.
- On August 12, 2009 the Corporation announced the results of the PEA
Study for the project which was based solely on the open pit
mineralization defined in the NI 43-101 Mineral Resource Estimate
described above. The PEA was compiled by a consortium of engineering
companies led by NCL Brasil Ltda ("NCL") of Belo Horizonte, Brazil. The
open pit mine design for the PEA was constrained, using a US $704 per
ounce gold price whittle pit-shell as a strategy for lowering the risk
of the project.
Highlights of the PEA Study include:
- Average annual production of 102,000 ounces of gold per annum over an
initial 7.1 year mine life.
- Total operating cash cost of US$428 per gold ounce.
- Project after tax net present value ("NPV") of US$123.3 million based
on a 5% discount rate and a gold price of US$900 per ounce.
- Project after tax internal rate of return ("IRR") of 32.0%, with a 2.9
year payback on project capital expenditures, at a gold price of US$900
per ounce.
The project will be a conventional open pit mine with down-the-hole drill rigs
and blasting, backhoe excavators, and conventional haul trucks. The processing
operation will include crushing the ore and processing it in an industry
standard carbon in leach and ADR (adsorption, desorption, and recovery) plant
followed by a detoxification process prior to placing the tailings in an
impoundment area. Based on metallurgical test work, the gold recovery is
estimated at 90%. The open pit mining operation will be at a rate of 6,000
tonnes per day with a life-of-mine average plant feed grade of 1.65 g/t gold
over a mine life of 7.1 years.
The PEA Study has also demonstrated a good probability of additional higher
grade ounces from an underground operation that could substantially add to the
overall operation; both in terms of extending the mine life of the project and
significantly increasing the annual production rate up to another 50%. The
Corporation will be further evaluating and assessing this underground component
as it advances the feasibility study.
According to the cautionary statement required by NI 43-101, it should be noted
that this assessment is preliminary in nature as it includes inferred mineral
resources that cannot be categorized as reserves at this time and as such there
is no certainty that the preliminary assessment and economics will be realized.
- On May 23, 2009 the Corporation commenced a Phase II drill program, with
the primary objective of infill drilling in the open pit resource area
to upgrade the inferred resource to the measured and indicated category.
- In 2009, 153 holes for 21,000 metres were completed along with re-
sampling of 43 holes drilled by the previous operator, Vale. To date,
Carpathian has drilled a total of 217 holes for 32,000 metres on the
property. In addition, Carpathian has re-sampled drill core from 145
drill holes totaling 24,000 m of drilling completed by Vale.
- In addition to the infill drill program the Corporation drill tested two
new gold targets located 700 m south and 250 m north of the Phase II
infill drilling program area, These initial drill holes intersected the
near-surface strike extension (less than 50 m below surface) of the
mineralized RDM shear zone at economic gold grades, as shown below.
-- FRM-159 with 5.5 m of 1.72 g/t Au located approximately 700 m south of
the present open-pit along strike
-- FRM-153 with 2.9 m of 3.64 g/t Au located approximately 250 m north of
the present open-pit along strike
- Other field oriented work completed during 2009 included the completion
of a surface trenching program over the 700 m long south extension zone
(south of the existing pit) comprising 15 trenches at nominal 40 metre
spacing. Results from this trenching program will be utilized in the new
Resource Estimate.
- Late in 2009, the same consortium that completed the PEA study was
awarded the contract for the Feasibility Study and work on this study,
including a new updated resource and reserve estimate for the open pit
mineralization.
- The Corporation advanced various time-line sensitive aspects; for
example, baseline flora and fauna field studies have been completed for
the Environmental Impact Assessment ("EIA") report as well as the Social
Impact Assessment ("SIA"), both of which are required for permitting the
development of the project.
- All required documents necessary for obtaining the first permit, the
Licenca Previa ("LP"), which is the first of three licenses that are
required by the Brazilian environmental agency, SUPRAM, to allow the
Corporation to develop, build and operate the RDM Gold Project, were
completed and submitted. The final public hearing for obtaining this
permit was on December 22nd and it is expected that the permit will be
granted shortly. This permit will allow the Corporation to commence
development of the project. Once the LP is awarded, the Corporation will
advance to the next step to obtain the Licenca Instalacao ("LI") and the
Licenca Operacao ("LO"). The LI will require detailed engineering and
design work that will be extracted from the feasibility study work. The
receipt of this license will allow construction to begin on the project.
It is expected that the LI will be awarded during the second quarter of
2010. The LO will be granted at the end of the construction period.
- Subsequent to the release of the PEA study, the Corporation has been
contacted by a number of banks and financial institutions with the view
to presenting proposals for the capital funding of the RDM Gold Project.
As of late 2009, the Corporation was in advanced discussions on several
fronts and is confident that it will be able to secure the necessary
funding on suitable terms.
Rovina Valley Project, Romania
The Rovina Valley Project ("RVP") is comprised of three gold-copper porphyry
systems discovered by the Corporation on its 100% owned Rovina Exploration
License in Central Romania. Since 2006, 181 diamond drill holes for 71,375 m
have been completed on the project. In late 2008, PEG Mining Consultants Inc.
("PEG") completed a NI 43-101 resource estimate. This Resource Estimate is based
on the drill results from each of the Colnic, Rovina and Ciresata porphyry
deposits, utilizing diamond drill hole data from the 2006, 2007 and 2008
drilling campaigns, and is summarized below.
- Measured + Indicated - 193,100,000 tonnes at 0.49 g/t Au for 3,070,000
ounces Au and 0.18% Cu for 759,100,000 lbs Cu
- Inferred - 177,000,000 tonnes at 0.68 g/t Au for 3,890,000 ounces Au and
0.16% Cu for 663,100,000 lbs Cu
Base case cut-offs used in the table are 0.45 g/t Au eq. for the Colnic
deposit, 0.70 g/t Au eq. for the Ciresata deposit and for 0.30% Cu. eq.
for the Rovina deposit.
Au eq. determined by using a gold price of US$675 per ounce and a copper
price of US$1.80/lb as defined by PEG. Metallurgical recoveries are not
taken into account.
The 2008 resource estimate includes enough contained gold-only ounces (3.07 M
ounces in the Measured + Indicated category and 3.89 M ounces in the Inferred
Category) to place the Corporation within the top tier of advanced-exploration
companies (top 20) hosting resources that have not yet been developed. Drilling
indicated that the total resource size of this project has not yet been fully
defined and further immediate potential exists to expand the current resource
estimate. It should be noted that the Ciresata Deposit hosted a significant
number of tonnes above the cut-off grade of 0.70 g/t Au eq that were not
incorporated into the resource estimate due to low drill hole density as they
lay on the edges of the resource estimate mineralization and at depth where the
mineralization is still open. Essentially every drill hole in Ciresata bottomed
in higher grade gold and copper mineralization. In addition, results from a
soil-geochemistry in-fill program highlighted a coincident gold + copper anomaly
extending 300 metres west from the present drill hole pattern with greater than
10 ppb gold and greater than 20 ppm copper. This anomaly is a high priority
drill target for extending the Ciresata mineralization laterally, which will be
followed up in 2010.
During 2009 the following activities were carried out.
- A detailed Preliminary Economic Assessment study was conducted,
evaluating primarily the extraction of the higher-grade gold and copper
mineralization for each deposit to enhance start-up economics and
overall mill head grade higher than the average resource grade. At both
the Colnic and Rovina Deposits this mineralization comes to surface,
whereas the Ciresata Deposit has continuous zones of higher-grade gold
and copper mineralization that persist at depth which is favourable for
an underground bulk mining scenario.
New bench scale metallurgical test work is nearing completion for this
study, based on lock cycle test work on representative samples for each
deposit, with the objective of producing a saleable copper concentrate
maximizing gold recoveries without the use of any cyanide upgrading
procedure. The Corporation is very encouraged by the high recovery rates
of gold and copper obtained from preliminary results and as such
additional confirmation work is being conducted by SGS Lakefield, which
is expected to be completed within the first quarter of 2010 at which
time the results of the PEA will be published.
The following provides guidance as to what the PEA study is reviewing
and should not be relied upon as the final or definitive results:
- mining and processing rate of 40,000 tonnes per day from two open pits
and one underground operation;
- maximizing early year head grades in the order of + 0.80 g/t Au and 0.20
% copper;
- producing a saleable copper concentrate in the range of 22-25% Cu with
80 to 100 g/t Au, and;
- approximate +18 year mine life, producing in the order of 90,000 tonnes
of copper concentrate per year resulting in approximately 220,000 ounces
of gold and 22,000 tonnes of Cu per year.
- Throughout 2009, the corporation continued to work on advancing its
community relationship and stakeholder engagement programs. As one
example, through the corporation's partnership program with the local
city council and European-Funded NGO groups, a children's playground and
library were constructed and opened in July 2009. In addition, long-lead
baseline data for use in EIA and SIA studies continues to be collected
and documented.
- Renewal of exploration license for an additional three-year period.
Hungary
The Corporation entered into a Joint Venture Agreement with Caracal Gold LLC
("Caracal"), an indirect wholly-owned subsidiary of Electrum Ltd., a private
company based in Denver, Colorado in late 2008, whereby Caracal had the option
to earn up to an 80% joint venture interest in HUMEX Kft ("HUMEX"), a Hungarian
corporation which is wholly-owned by Carpathian Gold Limited ("CGL"), a
subsidiary of the Corporation. HUMEX owns the Fuzerradvany Concession and
Kanszavar Exploration License covering mineral properties in Hungary (the
"Properties"). During the period of October 2008 to March 2009 Caracal completed
a drilling program on the Fuzerradvany Concession, which was comprised of 11
diamond holes for a total of 2,900 m. Drill hole assay intersection highlights
from this program are as follows:
- FR-105 with 91.0 metres(a) at 2.79 g/t Au and 77 g/t Ag
- FR-111 with 30.5 metres(b) at 1.27 g/t Au and 64 g/t Ag
(a) true width estimated at approximately 30 metres
(b) approximate true width
The option to earn in on a joint venture basis by Caracal was terminated in
April and the Corporation is reviewing these holdings and will decide on any
further work programs in 2010.
2010 Outlook
The Corporation's priorities are to continue to advance the RDM Gold Project
towards a construction decision by mid 2010 as well as continue to advance and
expand the resources at the Rovina Valley Project. The following lists the
Corporation's major objectives for 2010.
RDM Gold Project, Brazil
- Complete an updated resource and new reserve estimate as well as the
feasibility study and obtain the LI by the 2nd quarter of the year.
- Announce a construction decision during the 2nd quarter of the year.
- Continue exploration drilling, primarily on-strike following up on the
positive results obtained during 2009 to outline additional shallow
resources for future growth and extend the mine life of the project.
- Commence detailed studies for the exploitation of deeper resources via
an underground operation with the objective of adding approximately 50%
more mineable material approximately half way through the open pit
mining operation.
Rovina Valley Project, Romania
- Announce the results from the PEA study by late 1st quarter of the year.
- Utilize the results from the PEA study to convert the current
Exploration License to a Mining License.
- Commence a minimum 3,000 m drill program with the primary objective of
drilling deeper holes into the Ciresata deposit, to evaluate the
increasing grades of gold and copper values and build upon the size of
the deposit. Some lateral drilling is also planned to evaluate the
deposit size.
- When appropriate, the Corporation also plans to perform infill drilling
for the Ciresata deposit to upgrade the inferred resource to the
measured+ indicated category as well as evaluate new porphyry target
areas that have been identified.
- Continue EIA and SIA programs throughout the year and all long-lead time
programs that will be required for permitting of the project.
Further details on the Corporation and the individual projects can be found on
the Corporation's website at www.carpathiangold.com.
Mr. Titaro is the qualified person (as defined in National Instrument 43-101)
overseeing the design and implementation of the present exploration programs. He
is responsible for preparing the technical information contained in this news
release.
The Corporation is an exploration and development company whose primary business
interest is developing near-term gold production on its 100% owned Riacho dos
Machados Gold Project in Brazil along with progressing its exploration and
development plans on its 100% owned Rovina Valley Au-Cu Project located in
Romania.
Forward-Looking Statements: This press release includes certain statements that
may be deemed "forward-looking statements". Forward-looking statements are
frequently characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate", and other similar words, or statements that
certain events or conditions "may" or "will" occur. All statements in this
release, other than statements of historical facts, that address future
exploration drilling, exploration activities and events or developments that the
Corporation expects, are forward-looking statements. Although the Corporation
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 or developments may differ materially from those
in forward-looking statements. Factors that could cause actual results to differ
materially from those in forward-looking statements include market prices,
exploitation and exploration successes, continued availability of capital and
financing, and general economic, market or business conditions. There can be no
assurance that forward-looking statements will prove to be accurate, as results
and future events could differ materially from those anticipated statements. The
Corporation undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change. The reader is
cautioned not to place undue reliance on forward-looking statements.