VANCOUVER, BRITISH COLUMBIA (TSX VENTURE: SWC.DB) today
announced its operating results for 2007, which included production
of 9.66 million pounds of copper in concentrate including 5.35
million pounds of copper in the fourth quarter of 2007. This
production level is less than set out in the 2006 detailed
feasibility study ("DFS") but in line with revised forecasts set
out in the 2007 pre-feasibility study ("PFS") as a result of
decisions to (1) process lower grades during the commissioning and
ramp up of the mill in order to avoid unnecessary metal losses
until recoveries reached design levels and, (2) to construct the
Phase 2 mill expansion earlier than contemplated in the DFS,
resulting in some production being deferred into 2008 as the plant
expansion was constructed and tied in.
In addition, Sherwood announced its production estimate for 2008
of approximately 55 million pounds of payable copper and 24,000 oz
of payable gold, significantly higher than projected in its 2006
DFS, as a result of (1) completing the Phase 2 mill expansion
earlier than planned and (2) further optimization of the open pit
schedule for 2008, resulting in higher grade ore being processed
sooner. In fact, for the next several months, grades mined from the
pit are forecast to exceed 4% copper, but mill feed will likely be
capped at 4% copper in order to not overload the circuit with too
much concentrate.
"Our copper & gold production from the high grade Minto
copper-gold mine was very close to the revised target for the
entire year and in the first quarter of commercial production,"
said Stephen Quin, President & CEO. "This is a tremendous
achievement for our operating personnel, especially given the
challenges inherent in commissioning a new mine and in tying in the
Phase 2 mill expansion while still operating the mine," he added.
"Further, Sherwood has been successful in advancing a number of
project optimizations to the point that they could be brought into
our production plans, boosting metal production estimates for 2008
and beyond. Additional opportunities for further enhancements and
increases in production are still being evaluated as part of
Sherwood's relentless pursuit of value."
Sherwood Objectives
Sherwood's objective for the Minto Mine is twofold: firstly to
aggressively increase reserves and production in a staged manner,
resulting in a natural dehedging through increased production and,
secondly, to continually optimize and improve the production
profile and costs of operation through its relentless pursuit of
value. In both of these areas, Sherwood has made considerable
progress since the DFS was published in mid-2006, but continues to
strive to extract maximum value from its Minto Mine to the benefit
of all stakeholders, as discussed below. In addition, Sherwood
recently acquired a controlling interest in Western Keltic Mines,
which owns the high grade Kutcho copper-zinc-silver-gold project in
NW British Columbia. Based on what is a very similar scale of
project, this acquisition provides Sherwood with the opportunity to
repeat its experience at Minto to repeat the successful
optimization, construction and operation at Kutcho.
Forward Sales
As a result of the expanded production profile outlined in the
recently completed PFS, forward sales now account for approximately
50% of the next four years production and approximately 32% of
current life-of-mine production. This represents a marked decrease
in forward sales from the previously forecast 75% of its metal
production in the first four years based on production levels set
out in the original DFS. A decrease in forward sales provides
Sherwood with increased exposure to current high spot prices for
copper, gold and silver. The percentage forward sold excludes any
consideration of potential production from the Kutcho project,
which is entirely unhedged. Details of the current forward sales
positions on a quarterly basis are attached to this press
release.
2007 Operating Results
Key operating statistics for the Minto Mine in the third and
fourth quarters of 2007, and for the entire year (including waste
stripping for the entire 12 months and limited concentrate
production in the second quarter of 2007), are presented below. All
costs and production prior to October 1, 2007 were capitalized, and
commercial operations commenced on October 1, 2007.
---------------------------------------------------------------
Q3/2007 Q4/2007 Total 2007(i)
---------------------------------------------------------------
Tonnes mined 2,836,571 2,299,882 14,919,032
---------------------------------------------------------------
- Ore 495,870 131,162 700,398
---------------------------------------------------------------
- Waste(ii) 2,340,701 2,168,720 (iii)14,218,634
---------------------------------------------------------------
Ore grade
---------------------------------------------------------------
- Copper (%) 1.69% 2.02% 1.70%
---------------------------------------------------------------
- Gold (g/t) 0.45 0.61 0.45
---------------------------------------------------------------
- Silver (g/t) 7.0 7.6 6.8
---------------------------------------------------------------
Mill throughput
---------------------------------------------------------------
- Tonnes processed 117,382 100,811 238,446
---------------------------------------------------------------
- Copper grade (%) 1.90% 2.57% 2.16%
---------------------------------------------------------------
- Gold grade (g/t)(ii) N/A N/A N/A
---------------------------------------------------------------
- Silver grade (g/t) 6.9 9.1 7.7
---------------------------------------------------------------
Recoveries
---------------------------------------------------------------
- Copper 78.1% 93.7% 85.1%
---------------------------------------------------------------
- Gold(i) N/A N/A N/A
---------------------------------------------------------------
- Silver 68.6% 87.7% 77.5%
---------------------------------------------------------------
Concentrate
---------------------------------------------------------------
- Tonnes produced (dmt) 4,965 7,086 12,630
---------------------------------------------------------------
- Copper grade (%) 35.1% 34.3% 34.7%
---------------------------------------------------------------
- Gold grade (g/t)(i) N/A N/A N/A
---------------------------------------------------------------
- Silver grade (g/t) 112.4 113.8 113.0
---------------------------------------------------------------
Contained Metal
---------------------------------------------------------------
- Copper (lbs) 3,837,143 5,350,602 9,662,003
---------------------------------------------------------------
- Gold (oz)(i) N/A N/A N/A
---------------------------------------------------------------
- Silver (oz) 17,940 25,932 45,890
---------------------------------------------------------------
(i) From June - December 2007 inclusive, except the mining
quantities are inclusive of all pit production through
the end of 2007.
(ii) Gold is not assayed on site, resulting in a significant
lag in receiving this data.
(iii) Includes capitalized pre-stripping treated as
pre-production costs in the DFS.
The key points related to the 2007 and early 2008 production are
as follows:
- Copper recoveries are now averaging 93-94% on a consistent
basis with individual days as high as 98% versus plan of 90-93%,
while concentrate grades have averaged 37% versus plan of 30-33%
during commissioning of the Phase 2 expansion.
- As previously disclosed through 2007, mill throughput was
hampered in the early months of operation by poor mechanical
performance of the flotation cells and limitations in the tailings
and concentrate filtration. By year-end 2007, these issues had been
resolved and the plant is currently ramping up to full capacity of
2,400 tonnes per day, with minor on-going tie-ins completed in
January and February 2008. In the meantime, when throughput is less
than full capacity, higher than planned grade has been fed to the
mill (2.6 - 2.9% versus 1.9 - 2.0% planned) so that copper metal
production in each of December 2007 and January 2008 have met
budget.
- Reconciliation of ore mined during 2007, based on blast hole
assays, suggest approximately 18-20% more tonnes of ore at similar
grades as compared to those estimated in the reserve block model
used in the DFS and PFS. This upside was an opportunity identified
in the 2006 DFS. The higher tonnages are an encouraging trend, but
no definitive conclusions can be made until additional data is
generated throughout the reserves.
- Stripping at the Minto pit is accelerated in the early years
and decreases thereafter, as set out in the PFS.
- Sherwood currently has more than 13,000 dmt of concentrate
stored between the Skagway ore terminal and its on-site storage
facility at Minto, with a ship scheduled to pick up approximately
10,000 tonnes of concentrate in early March.
Production Outlook & Forward Sales
As announced December 12, 2007, Sherwood reported details of an
independent pre-feasibility ("PFS") for the Minto Mine that
incorporated a Phase 3 expansion of the mill commencing in 2009 and
the mining of the Area 2 deposit commencing in 2011. The following
table summarizes the estimated payable metal production set out in
the PFS and the quantities forward sold. This combination provides
significant downside protection but considerable upside opportunity
as production plans increase.
---------------------------------
Pre-Feasibility Study (Dec. 2007)
---------------------------------
2008 2009 2010 2011
--------------------------------------------------------------------------
Payable Copper 000's lbs Cu 57,155 51,778 81,666 42,491
- Copper Forwards 000's lbs Cu 25,190 32,825 27,798 24,251
- Average forward pricing US$/lb $2.85 $2.49 $2.19 $2.41
- Uncommitted copper 000's lbs Cu 31,965 18,954 53,868 18,240
- Copper committed (%) 44.1% 63.4% 34.0% 57.1%
Payable Gold Oz Au 24,504 18,662 35,455 21,059
- Gold Forwards Oz Au 12,126 14,424 14,025 13,520
- Average forward pricing US$/oz $653 $653 $653 $718
- Uncommitted Gold Oz Au 12,378 4,238 21,430 7,539
- Gold committed (%) 49.5% 77.3% 39.6% 64.2%
Payable Silver 000's oz Ag 262.1 262.4 436.1 195.5
- Silver Forwards 000's oz Ag 162.8 156.6 132.0 151.4
- Average forward pricing US$/oz $11.88 $11.90 $11.90 $13.50
- Uncommitted Silver 000's oz Ag 425 419 568 347
- Silver committed (%) 62.1% 59.7% 30.3% 77.5%
--------------------------------------------------------------------------
-----------------------------------------------------------------
Total/
2012 2013 2014 2015 Ave.
--------------------------------------------------------------------------
Payable Copper 000's lbs Cu 44,527 23,501 37,833 8,951 347,903
- Copper Forwards 000's lbs Cu 110,064
- Average forward
pricing US$/lb 2.5
- Uncommitted copper 000's lbs Cu 44,527 23,501 37,833 8,951 237,839
- Copper committed (%) 0.0% 0.0% 0.0% 0.0% 31.6%
Payable Gold Oz Au 19,998 8,670 14,982 2,567 145,897
- Gold Forwards Oz Au 54,095
- Average forward
pricing US$/oz $669.45
- Uncommitted Gold Oz Au 19,998 8,670 14,982 2,567 91,802
- Gold committed (%) 0.0% 0.0% 0.0% 0.0% 37.1%
Payable Silver 000's oz Ag 180.7 96.4 122.4 32.3 1,588
- Silver Forwards 000's oz Ag 603
- Average forward
pricing US$/oz $12.30
- Uncommitted Silver 000's oz Ag 181 96 122 32 2,191
- Silver committed (%) 0.0% 0.0% 0.0% 0.0% 38.0%
-------------------------------------------------------------------------
Achievement of production levels set out in the PFS in 2008 is
dependent on achieving and maintaining design grades, throughput
and recoveries, but is achievable with existing permits, while the
production levels in years 2009 and beyond are also dependent on
amendments to operating permits to increase mill throughput and
permit mining the Area 2 deposit. These forecasts take no account
of exploration success in 2007 or the acquisition of the Kutcho
project, which could result in increased unhedged production in
future years.
An unusually long period of cold weather (minus 40 centigrade or
below) in January and the first half of February did affect mining
operations but, with more than 500,000 tonnes of ore stockpiled,
the impact on milling operations was reduced. On the processing
front, the very cold primarily affected crusher operations leading
to occasional shortages of feed for the mill, but operations were
able to adjust by feeding higher grade ore to the mill, mitigating
the impact on January production and, to a lesser extent,
February's production. However, sufficient high grade ore is
expected to be available from the pit to allow overall 2008 goals
to be met. A redesign of the crusher feed mechanism during the
summer of 2008 should prevent this from being an issue going
forward.
Sherwood also advises that the first and last quarters are
projected to be lowest production quarters in 2008 due to the ore
release schedule from the pit and, in the case of the first
quarter, completion of commissioning and ramp-up to full Phase 2
mill capacity during the quarter.
Continued Optimization
As reported in the 2006 DFS, a number of opportunities to
further optimize the Minto project beyond what was established in
the DFS were identified. Since that study, a number of these
opportunities have been incorporated and were addressed in the
recent PFS, while several others are ready to implement and others
are a matter of on-going work. The list following identifies these
opportunities and updates the status on each.
1. Accelerate Phase 2 mill expansion to 2,400 tonnes per day of
throughput. Construction was completed at the end of December, more
than six months ahead of the feasibility schedule and commissioning
is in progress with sustained tonnages of over 2,000 tonnes per day
achieved to date. Included in the PFS.
2. Access grid power replacing more expensive diesel power.
Construction of the power line commenced late 2007 and is scheduled
for completion before the end of 2008. Line clearing and route
survey is well advanced. Included in the PFS.
3. Reduce waste stripping by steepening the pit walls. A
geotechnical program completed in early 2007 has allowed steepened
pit walls to be utilized since mid-2007. Included in the PFS.
4. Utilization of coarser grinding in the mill, allowing
increased throughput for minimal capital expenditures. Extensive
metallurgical bench scale test work in 2007 confirmed that mill
throughput can be increased significantly by utilizing a coarser
grind with minimal impact on recoveries, which is the basis for the
Phase 3 mill expansion to 3,500 tonnes per day incorporated in the
PFS. Full scale testing of coarser grinding in the Minto mill will
likely occur in 2008.
5. Rescheduled mining of the open pit bringing grade (and
therefore higher metal production) forward. Given the northern part
of the pit has higher copper grades, significantly higher precious
metal grades and higher recoveries, and generates a higher grade
concentrate (resulting in lower transportation and smelting costs
per unit of metal), combined with current high metal prices,
developing the pit northward in the early years from the initial
cut, as opposed to southward, is expected to result in higher metal
production and increased profitability. A preliminary version of a
rescheduled pit is used in the PFS, resulting in increased
production in 2008 vs. the DFS (from grade alone, assuming no
throughput increase) and in 2009 and 2010 from a combination of
higher grade and higher throughput. An additional iteration of this
mining plan is currently being reviewed, with the objective of
moving some of the exceptionally high grade production in 2010
forward into late 2008 and 2009.
6. Benefit from positive reserve reconciliation. As noted above,
the blast hole assay data suggests approximately 18-20% more ore
tonnes mined to date versus the reserve block model used in the DFS
and PFS. This is likely due to undersampling of historic core and a
number of other factors and was identified as an opportunity in the
DFS. The trend observed to date will continue to be monitored and
has not been incorporated in the PFS; Sherwood views this as an
unquantified upside opportunity.
7. Increased reserves. Given the ability to increase mill
throughput for minimal capital, the single biggest opportunity to
increase value of the Minto Project is to add reserves. The 2006
Area 2 discovery was incorporated into the PFS, but the exploration
successes of 2007 at Area 118, the southeast corner of Area 2 and
Ridgetop offer near term potential for resource additions which
were not included in the PFS. Resource estimates are in process for
these areas, and additional drilling in planned in 2008 to more
fully evaluate the potential of these and to drill test other
areas.
8. Improved copper recoveries in the southern pit area. In the
DFS, copper recovery for a limited amount of tonnage in the
southern area of the Minto pit was assumed to be 75% in the DFS
based on historic test work. Based on bench scale test work
conducted during 2007 the recovery for this material has been
increased to 85% in the PFS. Further metallurgical test work
conducted in 2007 on all other ore in the pit, aside from this one
area, yielded recoveries in the 93-94% range, as used in the
PFS.
9. Gravity gold recovery. In addition to a base recovery of
approximately 74% assumed in the DFS, coarse visible gold has been
observed in core during 2006-2007 drilling and a field trial of a
gravity gold recovery circuit is planned for mid- to late 2008.
This opportunity has not been incorporated in the PFS.
10. Waste dump relocation. The PFS identified possible
alternative locations for the waste rock dumps, which could reduce
waste haulage costs. In order to determine the viability of these
alternatives, geotechnical drilling is required, which will
commence before the end of February. These geotechnical holes will
be extended into bedrock to test buried geophysical targets that
could represent additional mineralization not previously
evaluated.
Kutcho Project
Now that Sherwood has acquired 91.7% ownership of Western Keltic
Mines, owner of the high grade Kutcho copper-zinc-gold-silver
deposit in northwestern British Columbia, Sherwood has begun its
process of reassessing the development options for the deposit.
Sherwood's objective will be to take a more Minto-like approach to
the development of Kutcho, potentially by focusing on the rapid
development of a smaller scale, lower capital cost operation that
is focused on high grade production up front. In order to achieve
this objective, Sherwood intends to:
1. Update the current resource estimate;
2. Re-design the open pit to optimize grade and tonnage
production;
3. Re-scope the project scale to optimize profitability, while
reducing capital;
4. Initiate an in fill drill program to better define near
surface mineralization and higher grade trends, and re-optimize the
open pit;
5. Conduct a metallurgical program focused on optimizing process
design and recoveries to feasibility standards and explore
opportunities to increase recoveries;
6. Continue the permitting process with the relevant
authorities;
7. Engage local stakeholders, including First Nations, through
community consultations.
More definitive information on the scope and timing of these
activities will be provided as they are developed.
Sherwood
Sherwood's successful consolidation of the ownership of the
Minto Project provides a unique investment opportunity -
participation in a high-grade, open pit copper-gold mine located in
Canada with tremendous exploration potential on the property.
Aggressive exploration, in parallel with successful mine
development and operations, provides Sherwood the opportunity to
grow from within through resource and reserve additions in pursuit
of further production expansions. Sherwood plans to continue this
"growth from within" strategy, along with further operational
optimizations and the pursuit of merger & acquisition
opportunities, in its relentless pursuit of value. In parallel,
Sherwood aims to repeat its success with the Minto project at the
Kutcho project.
Quality Assurance
The technical information in this news release has been prepared
in accordance with Canadian regulatory requirements set out in
National Instrument 43-101 and reviewed by Stephen P. Quin, P.
Geo., President & CEO for Sherwood Copper Corporation. The
exploration activities at the Minto project site are carried out
under the supervision of Brad Mercer, P. Geol., Exploration Manager
with Sherwood. The operational information relating to the Minto
Mine in this release have been carried out under the supervision of
Ian Berzins, P.Eng., General Manager of the Minto Mine and Kevin
Weston, P.Eng., Chief Operating Officer for Sherwood Copper.
Additional Information
Additional information on Sherwood and its Minto Project can be
obtained on Sherwood's website at
http://www.sherwoodcopper.com.
On behalf of the board of directors
SHERWOOD COPPER CORPORATION
Stephen P. Quin, President & CEO
This document may contain "forward-looking statements" within
the meaning of Canadian securities legislation and the United
States Private Securities Litigation Reform Act of 1995. These
forward-looking statements are made as of the date of this document
and the Company does not intend, and does not assume any
obligation, to update these forward-looking statements.
Forward-looking statements relate to future events or future
performance and reflect management's expectations or beliefs
regarding future events and include, but are not limited to,
statements with respect to the estimation of mineral reserves and
resources, the realization of mineral reserve estimates, the timing
and amount of estimated future production, costs of production,
capital expenditures, success of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims
and limitations on insurance coverage. In certain cases,
forward-looking statements 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 statements that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved" or the negative of these
terms or comparable terminology. By their very nature
forward-looking statements involve 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 statements. Such
factors include, among others, risks related to actual results of
current exploration activities; changes in project parameters as
plans continue to be refined; future prices of resources; possible
variations in ore reserves, grade or recovery rates; accidents,
labour disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of development or construction activities; as well as those factors
detailed from time to time in the Company's interim and annual
financial statements and management's discussion and analysis of
those statements, all of which are filed and available for review
on SEDAR at www.sedar.com. 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 statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking 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.
Sherwood Copper Corporation
Summary of Forward Sale Contracts (as of February
20, 2008) to Accompany Press Release Dated
February 25, 2008
--------------------------------------------------
COPPER
--------------------------------------------------
Weighted Average
Price Price
Year Tonnes Lbs (US$/t) (US$/oz)
--------------------------------------------------
2008 Q1 1,233 2,718,300 6,500.40 2.95
2008 Q2 4,261 9,393,897 6,401.23 2.90
2008 Q3 3,357 7,400,918 6,322.63 2.87
2008 Q4 2,575 5,676,903 5,957.85 2.70
Total 2008 11,426 25,190,018 6,288.92 2.85
2009 Q1 3,624 7,989,552 5,768.53 2.62
2009 Q2 4,184 9,224,141 5,572.36 2.53
2009 Q3 3,700 8,157,104 5,381.96 2.44
2009 Q4 3,381 7,453,829 5,184.07 2.35
Total 2009 14,889 32,824,626 5,484.62 2.49
2010 Q1 3,381 7,453,829 5,036.62 2.28
2010 Q2 3,381 7,453,829 4,895.54 2.22
2010 Q3 3,015 6,646,937 4,757.50 2.16
2010 Q4 2,832 6,243,491 4,620.02 2.10
Total 2010 12,609 27,798,087 4,838.48 2.19
2011 Q1 2,832 6,243,491 4,541.62 2.06
2011 Q2 3,352 7,389,895 5,405.54 2.45
2011 Q3 3,612 7,963,097 5,704.59 2.59
2011 Q4 1,204 2,654,366 5,655.37 2.57
Total 2011 11,000 24,250,849 5,308.66 2.41
--------------------------------------------------
TOTAL 49,924 110,063,580 5,466.74 2.48
--------------------------------------------------
---------------------------------------------------------
GOLD SILVER
--------------------------- ----------------------------
Weighted Average Weighted Average
Price Price
Year OZS (US$/oz) Year OZS (US$/oz)
--------------------------- ----------------------------
2008 Q1 2,291 653.42 2008 Q1 31,733 11.90
2008 Q2 4,358 652.83 2008 Q2 61,514 11.87
2008 Q3 2,220 653.98 2008 Q3 34,881 11.86
2008 Q4 3,257 653.48 2008 Q4 34,664 11.90
Total 2008 12,126 653.33 Total 2008 162,792 11.88
2009 Q1 3,959 653.45 2009 Q1 40,636 11.90
2009 Q2 3,883 653.46 2009 Q2 42,017 11.90
2009 Q3 3,291 653.42 2009 Q3 36,963 11.90
2009 Q4 3,291 653.42 2009 Q4 36,963 11.90
Total 2009 14,424 653.44 Total 2009 156,579 11.90
2010 Q1 3,291 653.42 2010 Q1 36,963 11.90
2010 Q2 3,414 653.44 2010 Q2 34,693 11.90
2010 Q3 3,660 653.49 2010 Q3 30,153 11.90
2010 Q4 3,660 653.49 2010 Q4 30,153 11.90
Total 2010 14,025 653.46 Total 2010 131,962 11.90
2011 Q1 3,660 653.49 2011 Q1 30,153 11.90
2011 Q2 3,620 727.58 2011 Q2 40,005 13.83
2011 Q3 3,600 765.25 2011 Q3 44,931 14.47
2011 Q4 2,640 727.69 2011 Q4 36,327 13.26
Total 2011 13,520 717.58 Total 2011 151,416 13.50
--------------------------- ----------------------------
TOTAL 54,095 669.45 TOTAL 602,749 12.30
--------------------------- ----------------------------
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press
release.
Contacts: Sherwood Copper Corporation Stephen Quin President
(604) 687-7545 or 1-888-338-2200 Sherwood Copper Corporation Brad
Kopp (604) 687-7545 or 1-888-338-2200 Sherwood Copper Corporation
Kristy Reynolds (604) 687-7545 or 1-888-338-2200 (604) 689-5041
(FAX) Website: www.sherwoodcopper.com
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